By Adam Haigh March 23 (Bloomberg) -- European stocks fluctuated as higher metal prices boosted mining companies, offsetting declines in banks before a budget vote in Portugal that may trigger a bailout. Rio Tinto Group led basic-resource producers higher. Inditex SA, the world’s largest clothing retailer, and UniCredit SpA, Italy’s biggest bank, gained after reporting earnings that topped estimates. Banco Espirito Santo SA, Portugal’s biggest publicly traded bank, dropped 2.6 percent. Sainsbury Plc sank 5.6 percent as sales growth slowed. The Stoxx Europe 600 Index slid 0.1 percent to 271.55 at 12:56 p.m. in London. The gauge has fallen 6.7 percent from this year’s high as Libya’s Muammar Qaddafi sought to quash a revolt aimed at ending his 41 years in power, sending oil surging, and Japan battled to stop its Fukushima Dai-Ichi nuclear plant from leaking radiation following the March 11 earthquake. “There are opportunities to take advantage of some cheaper prices in equities given the drop since the end of February,” said Henk Potts, an equity strategist at Barclays Wealth in London, which oversees $239 billion. “We believe the fundamentals look strong for equity markets and valuations are still below 10-year averages.” The gauge’s 10 percent plunge from Feb. 17 through March 16 dragged valuations on the measure to less than 11 times the estimated earnings of its companies, according to data compiled by Bloomberg. Portuguese Budget Portuguese Prime Minister Jose Socrates faces a vote in parliament on his deficit-cutting plan at 3 p.m. Lisbon time. The opposition Social Democratic and Communist parties both pledged yesterday to table resolutions against the proposals, a move which may push the country toward early elections and the need for a European Union bailout. Britain’s Chancellor of the Exchequer George Osborne said forecasts produced for the Treasury by the Office for Budget Responsibility see the economy growing 1.7 percent this year compared with a previous expectation of 2.1 percent. Bank of England policy makers voted 6-3 to keep interest rates on hold, saying they saw “merit in waiting” to assess the impact of rising oil on inflation. In Japan, the government estimated the damage from this month’s record earthquake and tsunami at as much as 25 trillion yen ($309 billion), an amount almost four times the hit imposed by Hurricane Katrina. Tokyo authorities said infants should avoid drinking tap water after finding traces of iodine. Rio, Xstrata Rio Tinto, the world’s third-largest mining company, advanced 2.2 percent to 4,101 pence. Xstrata Plc gained 2.6 percent to 1,409.5 pence. Copper, lead, nickel and tin climbed on the London Metal Exchange. Eurasian Natural Resources Corp., a Kazakh ferroalloy producer, rallied 4.3 percent to 937 pence as full-year profit more than doubled. The London-based company said net income advanced to $2.19 billion in 2010, topping the $1.92 billion average estimate of five analysts surveyed by Bloomberg. Inditex gained 5 percent to 56.70 euros after owner of the Zara chain said fourth-quarter net income advanced 14 percent, beating analyst estimates, as it sold more clothing and opened stores in Asia. UniCredit climbed 1.2 percent to 1.78 euros as the Italian bank reported fourth-quarter net income of 321 million euros ($455 million). That beat the 209 million-euro average estimate of 13 analysts surveyed by Bloomberg. Espirito Santo Espirito Santo dropped 2.6 percent to 3.06 euros and Banco Comercial Portugues SA declined 2.4 percent to 61.9 cents. A measure of banks led losses among 19 industry groups in the Stoxx 600. Sainsbury sank 5.6 percent to 334.4 pence as the U.K.’s third-largest supermarket owner said sales slowed more than analysts anticipated. ITV Plc declined 5.1 percent to 80.35 pence after Jefferies Group Inc. downgraded the U.K.’s biggest commercial broadcaster to “underperform” from “hold,” citing “dire” consumer confidence numbers plus potential margin squeeze from commodity price inflation in the retail sector. “We see downside risk to top line,” London-based analyst Nicholas Bell wrote in a note to clients. “Scope for additional cost cutting is now limited and returns on investment in content and online are uncertain.” --Editor: Andrew Rummer. To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net

Source