Luck gives small bonuses to many combat attributes.
Gains per point:
Accuracy: .40 Defense: .40 Critical hit chance: .30 Physical save: .175 Mental save: .175 Spell save: .175
In addition, each point gives 0.2% chance to not break stealth (same as Unseen Actions), and 0.2% chance to avoid your own AoE effects (similar to Spellcraft).