European Stocks Little Changed as Philips, Vestas Advance

European stocks were little changed, with the Stoxx Europe 600 Index capping its fourth straight quarterly gain, as contracts to buy previously owned U.S. houses jumped in May by the most in four years.

Royal Philips NV climbed the most in eight months after saying it’ll merge its LED-component and automotive-lighting units into a 1.4 billion-euro ($1.9 billion) separate company. Vestas Wind Systems A/S advanced 2.9 percent after getting orders for 450 megawatts from Electricite de France SA’s renewable unit. H. Lundbeck A/S fell 9.1 percent after saying its stroke treatment desmoteplase failed in a late-stage study.

The Stoxx 600 slipped less than 0.1 percent to 341.86 at the close of trading. The gauge climbed 2.3 percent in the second quarter, for its longest stretch of gains since March 2010. It dropped 0.7 percent in June as violence in Iraq and disappointing economic data from the U.S. offset the European Central Bank’s stimulus measures.

“When we look at the valuation of equity markets, we’re at the very top of realistic range,” Ian Richards, the London-based head of equity strategy at Exane BNP Paribas, said by phone. “Given the policy uncertainty that persists and the level of growth uncertainty that sits along side that, these valuations are pretty heroic. We’re cautiously positioned.”

The Stoxx 600 trades at 15.3 times the projected earnings of its constituents, compared with a price-to-earnings multiple of 13.6 at the beginning of February.

National benchmark indexes fell in 11 of the 18 western-European markets today. France’s CAC 40 lost 0.3 percent and the U.K.’s FTSE 100 dropped 0.2 percent. Germany’s DAX rose 0.2 percent.

Home Sales

An index of pending sales of American homes climbed 6.1 percent in May, the biggest advance since April 2010, after rising 0.5 percent in April, the National Association of Realtors said. The gain exceeded the most optimistic projection in a Bloomberg survey of economists, whose median forecast called for a 1.5 percent gain.

An earlier release showed German retail sales in May fell 0.6 percent from the previous month. Economists had projected a 0.8 percent increase.

Royal Philips climbed 4.1 percent to 23.18 euros, its biggest increase since Oct. 21. The world’s largest lighting manufacturer said it will focus on connected LED-lighting systems and services, while exploring the strategic options to attract outside investment into the separated business. The transaction, to be completed in the first half of 2015, will cost about 30 million euros.

Vestas rose 2.9 percent to 274.70 kroner after the biggest wind-turbine maker obtained orders to supply two U.S. wind farms. Vestas said it will deliver 225 machines to EDF Renewable Energy’s Roosevelt project in New Mexico and its Slate Creek farm in Kansas.

Ratings Upgrades

Osram Licht AG gained 7.1 percent to 36.84 euros. JPMorgan Chase & Co. upgraded the second-largest lighting company to neutral from a rating similar to sell, citing the recent decline in the stock price. Osram Licht tumbled 36 percent from March 6 through June 26.

Lundbeck declined 9.1 percent to 134 kroner, its biggest drop since December 2012. The Danish drugmaker focused on neurological diseases said further development of the experimental stroke drug desmoteplase is under consideration after it failed in a late-stage study.

EasyJet Plc lost 6.4 percent to 1,365 pence, the lowest level since November. Bank of America Corp. downgraded Europe’s second-largest discount airline to underperform, the equivalent of a sell, from neutral, citing overcapacity and a limited potential for earnings growth.

Espirito Slumps

Banco Espirito Santo SA dropped 17 percent to 60.2 euro cents, its biggest slump in at least 21 years according to data compiled by Bloomberg. Bank of America cut the senior and subordinated bonds of the Portuguese lender to underweight from overweight, similar to a change to sell from buy. The brokerage cited governance issues.

Separately, Reuters reported Luxembourg is investigating three entities of Espirito Santo on suspicion of breaches of the company law.

Syngenta AG retreated 1 percent to 330.30 Swiss francs, falling for the fourth day. JPMorgan advised investors to sell shares in the maker of crop chemicals, saying the seeds business will drag the company’s results.