European Stocks Fluctuate as Banks Retreat, Repsol Rallies

European stocks fluctuated as a selloff in bank shares offset a $7.1 billion Chinese investment in Repsol YPF SA’s Brazilian unit. U.S. index futures and Asian shares advanced.

Banco Santander SA and Societe Generale SA fell more than 1 percent after European Union officials warned that the fallout from the debt crisis could hurt the region’s banks. Repsol led energy producers higher, jumping 6 percent. Cap Gemini SA gained 3.3 percent after rival technology-consulting firm Accenture Plc forecast sales that may top analysts’ estimates.

The benchmark Stoxx Europe 600 Index gained 0.2 percent to 260.34 at 1:04 p.m. in London. The gauge has lost 1.4 percent this week, its largest drop since July, amid lingering concern that the region’s sovereign-debt will derail the economic recovery. Still, the gauge yesterday completed its biggest quarterly gain in a year.

“There is something of a paradox going on,” said Manoj Ladwa, a London-based senior trader at ETX Capital. “Traders are split between two camps -- either we have seen the worst of the economic crisis and we are on a path to recovery, or we going to see a double dip.”

Standard & Poor’s 500 Index futures gained 0.5 percent before data that may show manufacturing expanded in September at the slowest pace in 10 months, underscoring the Federal Reserve’s forecast of “modest” U.S. growth.

Factory Index

The Institute for Supply Management’s factory index dropped to 54.5 from 56.3 in August, according to the median estimate of economists. Readings above 50 indicate expansion. Other reports may show consumer confidence fell, construction dropped for a fourth straight month, and consumer spending cooled.

The MSCI Asia Pacific Index rose 0.6 percent today, extending the gauge’s fifth straight weekly advance, as energy companies climbed with crude oil. A report today showed China’s manufacturing expanded at the fastest pace in four months in September, adding to signs that economic growth is stabilizing.

European stocks erased gains earlier today after the EU said banks may be a risk of contagion from the region’s debt crisis, just one day after Ireland said it will take majority ownership of Allied Irish Banks Plc, its second bailout of the lender.

Brussels Meeting

A statement issued after a meeting in Brussels today said that finance ministers and central bank governors had “pointed out the risks related to the sovereign debt market that could have a contagious effect on the banking sector.”

Santander led a gauge of banks shares lower, falling 1.6 percent to 9.17 euros. Societe Generale SA retreated 1.3 percent to 41.72 euros and BNP Paribas fell 1.4 percent to 51.49 euros.

Repsol jumped 5.7 percent to 19.97 euros, the highest level in two years. China’s Sinopec will buy new shares in the company’s Brazilian unit and will hold 40 percent of that division after the capital increase. Repsol will also hold the remaining 60 percent stake.

“There are opportunities in companies that are potential M&A targets,” ETX’s Ladwa said on Bloomberg Television’s “Countdown” with Maryam Nemazee. “There seems to be a lot going on in the market and that theme is going to continue.”

U.K. partner BG Group Plc climbed 4.1 percent to 1,164.5 pence while Sacyr Vallehermoso SA, which owns 20 percent of Repsol, surged 11 percent to 4.87 euros. Galp Energia SGPS SA, Portugal’s biggest oil company, increased 6.6 percent to 13.50 euros.

Accenture Forecast

Cap Gemini, Europe’s largest computer services provider, rallied 3.4 percent to 38.04 euros after Dublin-based Accenture, the world’s second-largest technology-consulting firm, forecast net revenue of $5.6 billion to $5.8 billion for the quarter ending November. Analysts had projected $5.62 billion, according to the average of estimates compiled by Bloomberg.

Celesio AG advanced 4.2 percent to 16.64 euros after Exane BNP Paribas raised its recommendation for Europe’s biggest publicly traded drug wholesaler to “outperform” from “neutral.”

Schmolz & Bickenbach AG plunged 14 percent to 24.60 Swiss francs after the steelmaker announced plans to raise 297 million francs ($303 million) selling shares.

Subsea 7 Inc. rallied 3.6 percent to 119 kroner after the oil-services company that operates in the North Sea was awarded a $250 million contract by Total E&P UK Ltd. for the Laggan Tormore deepwater gas field development.

---With assistance by Maryam Nemazee in London. Editors: David Merritt, Andrew Rummer.

To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net.

To contact the editor responsible for this story: David Merritt at dmerritt1@bloomberg.net.

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European Stocks Climb as Repsol Shares Rally

Jerome Favre/Bloomberg

HSBC Holdings Plc increased 1.5 percent as Goldman Sachs Group Inc. recommended Europe’s largest bank.

HSBC Holdings Plc increased 1.5 percent as Goldman Sachs Group Inc. recommended Europe’s largest bank. Photographer: Jerome Favre/Bloomberg

Oct. 1 (Bloomberg) -- Miguel Martinez, chief operating officer of Repsol YPF SA, talks about the sale of a stake in its Brazilian unit to China Petrochemical Corp. for $7.1 billion. He speaks with Andrea Catherwood on Bloomberg Television's "The Pulse." (Source: Bloomberg)