* McDonald's says full-year results to be 'challenged' by flat sales
* UBS profit tops forecast despite charge to settle suit
* One-third of S&P 500 companies due to report this week
* Futures: S&P off 0.2 pt; Dow off 16 pts; Nasdaq up 2.75 pts
By Angela Moon
NEW YORK, July 22 (Reuters) - Wall Street was set for a flat open on Monday following a gloomy earnings outlook frrom McDonald's and as investors booked profits after the S&P 500 index hit a closing high on Friday.
McDonald's Corp, the world's largest restaurant chain, reported weaker-than-expected net income and warned that full-year results would be "challenged" in the face of falling sales in Europe, its biggest market. Shares fell 2.9 percent to $97.42 in premarket trade.
McDonald's earnings came in a busy week of reports, with about one-third of S&P 500 companies due to report, including Apple and entertainment provider Netflix Inc.
The S&P 500 index on Friday edged up to end at a second straight record high, while the Dow and Nasdaq stock gauges fell as disappointing earnings results from Microsoft and Google dragged on the market.
U.S.-listed shares of UBS rose 3.3 percent to $19.25 in premarket trade after the Swiss bank said its second-quarter profit beat forecasts despite a $920 million charge to settle a U.S. lawsuit and other matters.
"Considering the rally we've had recently, we are probably likely to move sideways or consolidate gains for a day or two, before moving up higher as earnings season intensifies. Nevertheless, the summer rally continues," said Peter Cardillo, chief market economist at Rockwell Global Capital in New York.
In economic news, June existing-home sales data is due at 10 a.m. (1400 GMT). For home sales, a Reuters survey of economists expect a reading of 5.25 million units at an annual rate, compared with a prior reading of 5.18 million.
Kimberly-Clark Corp, best known for its Kleenex tissues, posted a higher-than-expected quarterly profit on Monday, as cost savings helped offset the negative impact of foreign exchange rates.
Halliburton Co, the world's second-largest oilfield services company, posted higher-than-expected quarterly profit as it made more headway outside its home U.S. market. The stock was up 0.4 percent in premarket trade.
Analysts' estimates for corporate earnings have been reduced so much that investors believe the targets for the most part should be easily beaten.
Through Friday, of the 104 companies in the S&P 500 that have reported earnings for the quarter, 65.4 percent have reported earnings above analyst expectations, while 51 percent have topped revenue estimates, according to Thomson Reuters data.
S&P 500 futures were flat, and in line with fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures fell 16 points, while Nasdaq 100 futures added 2.75 points.
In Europe, shares were broadly unchanged by midday trade as mixed company earnings halted the index's march back towards five-year highs.