* McDonald's says 2013 results to be 'challenged' by Europe
* Shares of financials lead market, up for 10th day in 12
* Netflix shares fall after results
* Dow flat; S&P up 0.2 pct, Nasdaq up 0.4 pct
By Alison Griswold
NEW YORK, July 22 (Reuters) - The S&P 500 notched a third consecutive record closing high on Monday and major indexes rose, though disappointing McDonald's earnings kept the Dow from making significant gains.
Banks and health shares were the day's best performers, with financials advancing for the 10th time in the past 12 sessions. Bank of America led the group, while U.S.-listed shares of UBS rose 3.2 percent to $19.23 after the Swiss bank's second-quarter profit beat forecasts despite a charge to settle a U.S. lawsuit.
Analysts said the market is likely to trend higher in the absence of any weak economic news but would need strong earnings and positive forecasts from companies to post large gains.
"Most earnings have been good, maybe not great but good, and as a consequence I think investors continue to show that equities is the asset class of choice for them right now," said Rick Meckler, president of LibertyView Capital Management in Jersey City, New Jersey.
"It's difficult to see, short of some really strong economic numbers, what could push the market significantly ahead."
Weaker-than-expected results from McDonald's Corp, the world's largest restaurant chain, weighed on the Dow after the company said full-year results would be "challenged" by falling sales in Europe, its biggest market. Its shares lost 2.7 percent to $97.58.
Shares of Netflix Inc fell 6.1 percent in after-hours trading after the company reported a higher profit for the second quarter but added fewer subscribers to its video streaming service than analysts expected.
Five of the S&P 500 industry sectors advanced in Monday's session. Trading volume was below average, with 5.2 billion shares changing hands on U.S. exchanges.
The Dow Jones Industrial Average was up 1.81 points, or 0.01 percent, at 15,545.55. The Standard & Poor's 500 Index rose 3.44 points, or 0.20 percent, at 1,695.53, and the Nasdaq Composite Index added 12.77 points, or 0.36 percent, at 3,600.39.
The S&P 500 has added nearly 19 percent so far this year. Recent data showed funds that hold U.S. stocks gained $16.96 billion in the week ended Wednesday, the most since June 2008.
A rise in metal prices boosted materials shares, with Newmont Mining Corp up 5.8 percent to $30.35, enough to lead gains in the S&P materials sector.
Tech shares also moved higher, with Microsoft adding 1.9 percent to $32.01 after the software maker tumbled 11.4 percent on Friday following dismal results.
The PHLX housing sector index fell 0.8 percent after an unexpected drop in U.S. home resales in June. The data also gave support to bets the Federal Reserve will extend its rate of bond purchases to support the economy.
September, however, remains the most likely time for the Fed to announce that it will begin scaling back its $85 billion a month in bond purchases, according to a Reuters poll.
Nearly one-third of S&P 500 companies are expected to report earnings this week, including Apple on Tuesday.
Of the 109 companies in the S&P 500 that have reported earnings for the quarter, 64.2 percent have beaten analyst expectations, while fewer than half have topped revenue estimates, Thomson Reuters data showed.