By Sarah Jones Nov. 12 (Bloomberg) -- European stocks advanced after the Bank of England said it was prepared to lower interest rates again and results from UniCredit SpA and J Sainsbury Plc topped analysts' estimates. U.S. index futures increased. UniCredit, Italy's largest bank, rose 6.2 percent. Sainsbury climbed 5.1 percent to 286 pence as the third-biggest U.K. supermarket chain boosted its dividend. Hammerson Plc rallied more than 5 percent, leading gains by property companies, after BOE Governor Mervyn King said the bank was ready to cut rates as low as needed. Europe's Dow Jones Stoxx 600 Index added 0.5 percent to 213.23 at 12:07 p.m. in London, trimming its 2008 loss to 42 percent. Futures on the Standard & Poor's 500 Index gained 0.7 percent. The MSCI Asia Pacific Index dropped 1.3 percent. ``A short-term rally will come because we are very oversold,'' said Philippe Gijsels, a Brussels-based senior equity strategist at Fortis Global Markets, which has $62 billion under management. ``The news flow will start to get a little more positive.'' The Stoxx 600 is valued at 9 times reported earnings of the companies in the index, below the four-year average of 14 times profit. The gauge traded at 7.9 times earnings in Oct. 27, the lowest since at least January 2002. The S&P 500 trades at 19 times earnings, up from a low of 17 on Oct. 10. The MSCI World Index of 23 developed countries is valued at 12 times profit. Dresdner Kleinwort raised its recommendation for European and U.K. equities to ``neutral'' from ``underweight,'' saying the financial crisis may have peaked last month and valuations were low. Discounting Earnings ``Valuations are low and look to discount a substantial earnings decline,'' Philip Isherwood, London-based European and U.K. strategist at Dresdner, wrote in a report dated Nov. 11. More than $29 trillion has been erased from the value of global equity markets as credit losses and writedowns totaled $918 billion in the worst financial crisis since the Great Depression. Europe's Stoxx 600 is headed for its worst year on record. Earnings for the 1,364 companies in western Europe that reported results since Oct. 7 declined 13 percent on average, trailing expectations by 4.6 percent, Bloomberg data show. National indexes gained in 10 of the 18 markets in western Europe. The U.K.'s FTSE 100 climbed 1.3 percent. Germany's DAX added 0.8 percent, and France's CAC 40 advanced 1.2 percent. UniCredit climbed 6.2 percent to 1.976 euros. The bank reported a 54 percent drop in third-quarter profit to 551 million euros ($694 million) that still beat analysts' estimates of 428 million-euros. Raising Dividend Sainsbury jumped 5.1 percent to 286 pence after the third- largest U.K. supermarket chain said first-half pretax profit of 272 million pounds before one-time items beat the 267.9 million- pound estimate of 12 analysts. The company raised its first-half dividend by 20 percent to 3.6 pence a share. Hammerson, a U.K. shopping center owner, climbed 5.2 percent to 659.5 pence. British Land Co. Plc, the U.K.'s second-largest real estate investment trust, rallied 4 percent to 578.5 pence. BOE Governor King said policy makers are prepared to cut rates as low as needed to prevent recession from fueling deflationary pressures. The central bank slashed its key rate by 1.5 percentage points on Nov. 6 to the lowest since 1955. Electricite de France SA, the world's biggest operator of nuclear reactors, gained 1.6 percent to 48.275 euros after saying nine-month sales rose 6.9 percent to 45.6 billion euros on higher prices. That was more than the median estimate of 45.3 billion euros of analysts surveyed by Bloomberg News. To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net.

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