Oct. 17 (Bloomberg) -- European energy stocks, such as BP Plc and Total SA, rose the most in 2 1/2 years after the price of oil increased on concern a storm in the Caribbean may strengthen and disrupt production in the Gulf of Mexico.

``You have to buy'' shares of oil and gas producers, said Philippe Gijsels, chief strategist at Fortis's private investment unit in Brussels, which manages $62 billion. ``You have excellent earnings growth.'' Gijsels recommends investors own more energy stocks than are represented in benchmarks.

British Airways Plc and Iberia Lineas Aereas de Espana SA fell on concern higher fuel costs will dent airlines' profits.

Royal Philips Electronics NV paced gains by technology- related shares after Europe's largest consumer-electronics maker reported third-quarter earnings that beat analysts' estimates.

The Dow Jones Stoxx 50 Index gained 0.1 percent to 3180.29 in London. The Euro Stoxx 50, a gauge for the 12 countries using the euro, rose 0.2 percent. The Stoxx 600 lost less than 0.1 percent.

National benchmarks rose in 12 of the 18 western European markets. France's CAC Index and the U.K.'s FTSE 100 Index both added 0.2 percent, while Germany's DAX Index climbed 0.1 percent. Norway's OBX Index led gains with a 1.4 percent advance, paced by Statoil ASA and Norsk Hydro ASA.

BP, Europe's largest oil company, rose 2.6 percent to 629.5 pence. Total, the region's third-biggest energy producer, gained 2.1 percent to 208.7 euros.

Statoil and Norsk Hydro, Norway's largest oil companies, climbed 2 percent and 1 percent, respectively.

Profit Gains

The Stoxx 600 Oil & Gas Index climbed 1.8 percent, the best performer among 18 industry groups in the regional benchmark.

Earnings growth for energy companies is expected to reach 43 percent in 2005, compared with estimates of a 3.5 percent drop in January, according to FactSet Research Systems Inc. Next year, analysts predict profits in the industry may rise 1.9 percent.

The sub-index is the worst performer in the Stoxx 600 this quarter, sliding 7.9 percent. Still, it has had the second- biggest gain in the index this year, advancing 28 percent, bolstered by a 46 percent increase in the oil price.

Crude oil for November delivery climbed as much as 2.6 percent to $64.28 a barrel in after-hours electronic trading on the New York Mercantile Exchange. The futures reached a record $70.85 on Aug. 30.

Tropical Storm Wilma, the 21st named Atlantic storm this season, formed today west of Jamaica, the National Hurricane Center in Miami said. Oil production in the Gulf of Mexico is 67 percent less than normal following Hurricanes Katrina and Rita.

Fuel Costs

British Airways, Europe's third-biggest airline, dropped 0.9 percent to 299.75 pence. Iberia, Spain's No. 1 airline, lost 1.8 percent to 2.17 euros.

Fuel costs account for as much as 14 percent of airlines' total costs, according to Credit Suisse First Boston.

Philips, based in Amsterdam, rose 1.9 percent to 21.64 euros. The shares had their biggest gain since January after the company said third-quarter net income advanced 23 percent to 1.44 billion euros ($1.74 billion) on gains from stake sales and an unexpected increase in revenue. Profit surpassed the 1.25 billion euros predicted by the median estimate of 12 analysts surveyed by Bloomberg News.

The industry gauge tracking technology shares in the Stoxx 600 increased 0.3 percent.

Ericsson, Nokia, SAP

``There could be a swing back towards the sector,'' said Gary Dugan, chief investment officer at Barclays Investment Services in London, which manages about $98 billion. ``We should see some good quarterly results.''

Ericsson AB, the world's biggest maker of mobile networks, is among three technology companies in the Stoxx 50 that are scheduled to announce earnings this week. Nokia Oyj, the largest mobile-phone maker, and SAP AG, the No. 1 maker of business- management software, are the other companies in the industry due to report.

SAP advanced 1.4 percent to 144.60 euros. Quarterly results on Oct. 20 will show that the company is growing faster than Oracle Corp., its closest competitor, board member Leo Apotheker said at a business conference in Athens.

Nokia shares climbed 0.5 percent to 14.07 euros.

Sony Ericsson Mobile Communications Ltd., the cellular- phone joint venture owned by Sony Corp. and Ericsson, reported a 16 percent increase in third-quarter profit as sales beat analysts' estimates. Ericsson shares slipped 0.7 percent to 27.3 Swedish kronor.

DaimlerChrysler, Roche

DaimlerChrysler AG, the world's fifth-largest automaker, added 1.6 percent to 42.68 euros after General Motors Corp., the biggest U.S. carmaker, said it agreed with the United Auto Workers on ways to reduce health-care expenses by about $1 billion a year. The German company owns Chrysler in the U.S.

``The market is speculating that Chrysler can do similar things,'' said Lars Ziehn, an analyst at WestLB AB, who has a ``neutral'' rating on DaimlerChrysler shares. ``If you can get significant cost reductions, then that's good for the company.''

Roche Holding AG, the maker of the Tamiflu influenza drug, advanced 2.1 percent to 188 Swiss francs. The company is sending packages of Tamiflu to Turkey and Romania after the two countries confirmed cases of deadly avian flu.

Hennes & Mauritz AB, Europe's largest clothing-store chain, fell 1.3 percent to 261.5 Swedish kronor. The company said September sales rose 7 percent, less than the 13 percent gain estimated by analysts amid sluggish demand in Germany, Austria and Switzerland.

Aegis, Neste

Aegis Group Plc, which said this month it's in talks with more than one potential suitor, dropped 4.2 percent to 127 pence. That was the steepest decline since March 2004. Publicis Groupe SA, the world's fourth-biggest advertising company, said after the markets closed last week that it decided against bidding for Aegis, the world's No. 1 buyer of advertising space.

Neste Oil Oyj, Finland's only refiner, jumped 8.3 percent to 27.40 euros, the biggest gain in the Stoxx 600. Merrill Lynch & Co. raised its share-price forecast to 32 euros from 25 euros, citing prospects for European refining margins.

Elan Corp., Ireland's biggest drugmaker, and Biogen Idec Inc. said that a safety study found no new confirmed cases of the rare neurological disease that caused multiple sclerosis drug Tysabri to be withdrawn on Feb. 28. Elan shares climbed 2.7 percent to 6.8 euros.

Altran SA, Europe's largest provider of contract research, surged 17 percent to 10.3 euros. The shares gained the most in two years. The company reported a first-half profit of 17.7 million euros, compared with a loss of 5.8 million euros a year earlier, helped by cost reductions and increased sales in countries such as Britain and Germany.

To contact the reporter on this story: Kotaro Miyata in London at kmiyata2@bloomberg.net.

Last Updated: October 17, 2005 12:02 EDT