Repsol YPF SA (REP), the Spanish oil explorer seeking $10.5 billion from Argentina for seizing its assets, will line up behind companies from Exxon Mobil Corp. to Unisys Corp. (UIS) yet to be repaid by the most-sued nation on earth.

There are 26 cases pending against Argentina, more than any other country, at the World Bank’s International Centre for Settlement of Investment Disputes in Washington, the principal arbitration court for claims against sovereign countries. So far, it has refused to pay any of the tribunal’s judgments, according to a Bank of America Merrill Lynch economists’ report.

The prospects of compensation are dim for Madrid-based Repsol, the worst-performing oil stock this year, because of Argentina’s resistance to pay existing judgments and because Repsol’s case will be behind those of hedge funds, utilities and energy companies already pursuing reimbursement for currency devaluations, nationalizations and rate freezes after Argentina’s $95 billion default a decade ago.

“You end up in a conga line of people holding unsatisfied claims, and that’s not a good place to be,” Michael Nolan, a partner in the Washington office of international law firm Milbank, Tweed, Hadley & McCloy, said in a phone interview.

Repsol said after the April 16 expropriation of a 51 percent stake of its YPF unit that it’s seeking $10.5 billion in compensation. The company is planning to file for arbitration and will defend its shareholders rights, spokesman Kristian Rix said in a telephone interview on May 10 without specifying where the company would pursue its claim for compensation.

Repsol shares fell to a three-year low in Madrid on April 23 after the newspaper La Nacion reported that Argentina would seek to pay Repsol nothing for its majority stake in YPF SA (YPFD), seized by President Cristina Fernandez de Kirchner last month.

Local Appraisal Ordered

Fernandez said on April 16 that compensation for the seizure will be determined by Argentina’s National Appraisal Tribunal, the government-chartered tribunal established in 1944 to help determine the value of contested goods involving companies or government agencies.

“It’s not just that they will try to not pay Repsol anything,” said Arturo Porzecanski, an international finance professor at American University in Washington. “Even if they agree to pay something or are required to pay something, the likely scenario is that they will drag it out for as long as possible with appeals and annulments and reviews.”

The South American nation fights arbitration judgments, concerned that any payment could increase its overall liability and expose it to damages worth hundreds of billions of dollars, Eric David Kasenetz wrote in the George Washington International Law Review in 2010.

“They don’t mind spending hundreds of millions of dollars on the best lawyers just to buy time,” Porzecanski said in a telephone interview.

Government Goal

Cases seen by the World Bank’s panel, known by its initials ICSID, can typically last four years or longer, said Abby Cohen Smutny, a partner with White & Case in Washington.

It is “safe to assume” that Repsol will be exploring its options under bilateral investment treaties to bring an arbitration case against Argentina that could be filed at the ICSID, Smutny said.

In an effort to enforce existing arbitration judgments, the U.S. in March suspended Argentina’s participation in a trade program that allows certain goods from developing countries to be imported duty-free. That was because of its refusal to pay $300 million of ICSID arbitration awards to U.S. firms Azurix Corp., a Houston-based wastewater service company, and Blue Ridge Investments LLC.

Active on the Hill

“They are really encountering problems in Washington now,” Carolyn Lamm, a partner with White & Case in Washington, said in a phone interview from Istanbul. “Many of the judgment creditors are very active on the Hill. I don’t think that they will ultimately escape payment obligations.”

Venezuela, which has the second-most number of cases before the ICSID after Argentina, requested to leave the arbitration court on Jan. 24 as demands pile up from abroad for compensation following a decade of nationalizations under President Hugo Chavez, who said on Jan. 8 that Venezuela would not accept any rulings from the court.

Chavez’s government has negotiated compensation for some nationalized assets with steelmaker Ternium SA (TX) and settled out of the ICSID with Mexican cement maker Cemex SAB for $600 million, about half of what the company was seeking in arbitration, for seizing its local unit in 2008.

“It’s much easier to deal with Chavez. He has actually paid fair compensation to those he expropriated and has honored all of his country’s debts,” said Porzecanski. “His attitude has been much more respectful of international treaties and even domestic law than that of the Kirchners,” he said, referring also to Fernandez’s deceased husband and former Argentine president, Nestor Kirchner.

Enforcement Mechanisms

ICSID awards are enforceable in all 158 countries that are signatories to the ICSID convention, said Lamm. Argentina faces current pending cases from companies including AES Corp. (AES), Total SA (FP) and EDF International SA, according to the ICSID. Since taking office in December 2007, Fernandez has taken over Aerolineas Argentinas SA and seized $24 billion in private pension funds.

“If Argentina loses most, or even a good portion, of the claims pending in the ICSID, Argentina likely will face damages amounting to tens, possibly hundreds, of billions of dollars,” Kasenetz wrote in the law review paper.

The ICSID’s ‘enforcement mechanisms are strong and most effective with respect to assets that the country holds abroad that may already be subject to existing judgments, said Nolan. Arbitration courts use a rule to value expropriated assets based on the amount the company was worth before the nationalization was announced, said Lamm.

“Sooner or later, Argentina is going to have to deal with its obligations if it ever wants to go to international capital markets again,” she said. “Argentina will fight about every comma, repeatedly, because it prolongs judgment day.”

Shale Play

Repsol’s threat to sue any company that invests in YPF following the seizure is unlikely to deter investment in the Vaca Muerta field that contains more then 20 billion barrels of oil equivalent, said Daniel Kerner, a Buenos Aires-based analyst at the Eurasia Group.

“If they are unable to attract any investment whatsoever, then they may change their strategy. If anything, they will offer better terms to other companies rather than pay compensation,” Kerner said in a telephone interview.

Exxon Mobil Corp. (XOM) is seeking guarantees from Argentina for its joint venture with YPF to develop the Vaca Muerta field, newspaper Clarin reported on May 11. The negotiations are being watched by Chevron Corp. (CVX) and Total SA, which may also be interested in joint ventures with YPF, the Buenos Aires-based newspaper reported.

“The thinking that they have is that companies will come anyways, and the interest is very strong,” said Kerner. “Companies are trying to find ways to come in. I think the government may have a point.”

Repsol fell 2.3 percent to 13.72 euros today in Madrid. YPF SA fell 7 percent to 83.00 pesos at 12:14 p.m. today in Buenos Aires.

To contact the reporter on this story: Nathan Crooks in Caracas at ncrooks@bloomberg.net

To contact the editor responsible for this story: Dale Crofts at dcrofts@bloomberg.net

Copper prices, which gained the most in a week yesterday, may climb to $4.20 a pound for the first time since September, according to technical analysis by Paul Kavanaugh, a senior trader at PFGBest.

The futures contract for July delivery will rise 11 percent if prices on the Comex in New York top the 50 percent Fibonacci retracement level of $3.803 within a couple of trading sessions, Kavanaugh said in a telephone interview yesterday. The metal closed yesterday at $3.7735, rising 1.4 percent, the biggest gain since April 26. Prices still are down 1.5 percent in May, heading for the biggest monthly decline of the year.

“It is encouraging to see that copper is trying to claw back,” Kavanaugh said, noting that the 100 percent Fibonacci retracement level is $4.526. “In the short term, we will see some strength.”

Copper prices still are up 9.8 percent this year, partly on expectations that global demand will exceed mine output. PNB Paribas increased its forecast for a production deficit in 2012 to 400,000 metric tons on May 4 from an earlier estimate of 300,000 tons.

In technical analysis, investors and analysts study charts of trading patterns and prices to predict changes in a security, commodity, currency or index.

Fibonacci analysis is based on the theory that prices tend to drop or climb by certain percentages after reaching a high or low. A break above resistance or below support indicates a commodity may move to the next level. The difference between high and low points on charts is divided into retracement levels based on ratios that were described by 13th century mathematician Leonardo of Pisa, known as Fibonacci, and correspond to proportions found in nature.

To contact the reporter on this story: Debarati Roy in New York at droy5@bloomberg.net

To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net

Manufacturing grew in April at the fastest pace in almost a year, propelled by a pickup in orders that signaled factories will remain a source of strength for the U.S. expansion.

The Institute for Supply Management’s factory index climbed to 54.8 last month, exceeding the most optimistic forecast in a Bloomberg News survey and the best reading since June, the Tempe, Arizona-based group’s report showed today. Readings greater than 50 signal growth.

The world’s largest economy may pick up after slowing in the first three months of the year as the increase in bookings indicates American assembly lines will keep churning out more goods. Combined with a report showing manufacturing in China also accelerated, the figures sent the Dow Jones Industrial Average to the highest level since 2007 as the data eased concern global growth was slackening.

Manufacturing “continues to be a bright spot in the recovery,” said Ellen Zentner, a senior U.S. economist at Nomura Securities International Inc. in New York. “We have yet to see a drop-off in foreign demand for U.S.-manufactured goods, and that comes despite all the concerns of a slowdown in the global economy.”

The Dow gained 0.5 percent to close at 13,279.32 at the close in New York. The yield on the benchmark 10-year Treasury note rose to 1.95 percent from 1.91 percent late yesterday.

Elsewhere, China’s manufacturing expanded for a fifth month in April to reach the highest level in a year. The news wasn’t universally good as a U.K. manufacturing index fell more than forecast in April as export orders fell the most since May 2009.

Survey Results

The median forecast in a Bloomberg News survey of 79 economists projected the ISM index would drop to 53 from a reading of 53.4 in March. Estimates ranged from 52 to 54. The gauge averaged 55.2 in 2011 and 57.3 a year earlier.

The group’s orders gauge climbed to the highest level in a year, while its production measure put it its best performance since March 2011 and employment advanced to a 10-month high, today’s report showed. The group’s export index also improved.

“We seem to have good, strong order books filling up for the next few months, and that bodes well,” Bradley Holcomb, chairman of the ISM’s factory survey said in a telephone interview. “Things are moving forward and moving forward at a good sustainable level, not indicating at this point any slowdowns.”

Auto Sales

Stronger auto production bolstered the U.S. economy from January through March, which may keep supporting manufacturing. Motor vehicle output added 1.12 percentage points to growth, the most since the third quarter of 2009 and accounting for half of the 2.2 percent increase in gross domestic product. Cars last quarter sold at the fastest pace in four years, according to industry data.

The pickup in demand is holding up so far in the second quarter. Chrysler Group LLC led the five largest automakers by U.S. sales in exceeding analysts’ estimates for April. Chrysler’s sales climbed 20 percent and Toyota Motor Corp.’s deliveries rose 12 percent. Purchases were little changed at a 14.38 million annual rate last month after 14.32 million in March, according to data from Ward’s Automotive Group.

Manufacturers mentioned gains in automotive and high- technology industries, the Fed said in its Beige Book business survey, published April 11. The firms “expressed optimism about near-term growth prospects, but they are somewhat concerned about rising petroleum prices,” the Fed said in the report.

Industrial Demand

3M Co. (MMM), the maker of fuel system tune-up kits and Post-it Notes, posted first-quarter profit that beat analysts’ estimates because of rising U.S. auto and industrial demand. The St. Paul, Minnesota-based company’s industrial and transportation unit posted sales of $2.66 billion, an 8.6 percent increase.

At the same time, other areas may not be helping to support manufacturing in coming months. Business spending on equipment and software in the first quarter rose at the weakest in almost three years, a Commerce Department report showed last week.

Overseas demand for U.S. made-goods also risks fading as global growth slows. Spain’s economy contracted in the first quarter, putting the euro region’s fourth-largest economy into its second recession since 2009. The U.K. economy shrank 0.2 percent in the first quarter after contracting 0.3 percent in the prior three months as Britain slid into its first double dip recession since the 1970s.

‘Uneven’ Economy

“The global economy is uneven,” John Faraci, chairman and chief executive officer of International Paper Co. (IP), said during an April 27 earnings call. “We got a recession going on in Western Europe. The growth has slowed in China and India. And North Americas is a recovering but far from fully recovered economic environment.”

Another report today showed construction spending in the U.S. grew less than forecast in March as state and local government agencies continued to pull back. The 0.1 percent increase followed a 1.4 percent decline in February that was larger than previously estimated, the Commerce Department reported. The median estimate of economists surveyed by Bloomberg called for a 0.5 percent increase.

To contact the reporter on this story: Alex Kowalski in Washington at akowalski13@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz in Washington at cwellisz@bloomberg.net

A Chinese manufacturing index rose in April, signaling that a rebound in the world’s second-biggest economy may help to offset constraints on global growth from austerity measures in Europe.

The 49.3 final reading of a purchasing managers’ index from HSBC Holdings Plc (HSBA) and Markit Economics today compares with a preliminary 49.1 reported April 23 and a final 48.3 in March. A separate index released yesterday by China’s statistics bureau and logistics federation was at 53.3, indicating the fastest growth in a year.

Improvements in manufacturing may encourage Premier Wen Jiabao to extend a two-month pause in lowering banks’ reserve requirements as the effect of previous easing kicks in. Wen is seeking to rein in property and consumer prices without sending the economy into a so-called hard landing. Gross domestic product increased 8.1 percent last quarter from a year earlier, the least since 2009.

“Easing measures are starting to work,” said Qu Hongbin, Hong Kong-based chief economist for China at HSBC. China’s growth may “bottom out” this quarter and climb to an annual rate of more than 8.5 percent in the second half, Qu said.

The MSCI Asia Pacific Index added 0.7 percent as of 2:10 p.m. in Tokyo on the China data and a better-than-estimated manufacturing report from the U.S. Factory data is due today for the euro region and Germany after a U.K. gauge released yesterday fell more than economists forecast. Indian manufacturing expanded at close to the slowest pace in three months, a report from HSBC and Markit showed today.

Yuan Climbs

The yuan climbed the most in two weeks before talks between U.S. and Chinese officials in Beijing tomorrow.

The fourth round of the U.S.-China strategic and economic dialogue involves U.S. Treasury Secretary Timothy F. Geithner and officials led by Chinese Vice Premier Wang Qishan. The People’s Bank of China raised the fixing 0.19 percent to 6.2670 per dollar today, the strongest level since a peg ended in July 2005 and 0.7 percent stronger than last week’s closing price.

The yuan advanced 0.14 percent, the most since April 17, to 6.3011 per dollar as of 12:02 p.m. in Shanghai.

In a sign that China’s manufacturing remains constrained by weakness in global demand, the HSBC PMI has indicated contractions for six straight months, the longest run since the global financial crisis. The official index is based on responses from managers at more than 820 companies in 28 industries, while HSBC’s measure covers more than 420 companies and is weighted toward smaller businesses.

Case for Easing

“The need for aggressive policy easing is limited given the government’s desire to slow growth and the upside inflation risks,” Chang Jian, a Hong Kong-based economist with Barclays Capital, said before today’s release. “Fine-tuning measures such as easing credit, support for first-home buyers and expansionary fiscal policy to support infrastructure will gradually feed through, so the slowdown in growth will bottom out this quarter.”

China’s new yuan loans may have fallen to about 700 billion yuan (US$111 billion) last month, down almost 30 percent from March, the China Securities Journal reported today, citing estimates from unspecified “market participants.” China’s four major state lenders extended only 101.7 billion yuan of new loans through April 25, the newspaper said, without saying where it obtained the figures.

In Beijing today, China and South Korea said that the two nations would begin talks this month on a free-trade agreement and have a goal of lifting annual trade to $300 billion by 2016, according to Chinese Commerce Minister Chen Deming.

Chen also said that the global recovery is sluggish as the global financial crisis endures.

In Thailand, the central bank will keep interest rates on hold today, according to a Bloomberg News survey of analysts.

To contact Bloomberg News staff on this story: Scott Lanman in Beijing at slanman@bloomberg.net

To contact the editor responsible for this story: Paul Panckhurst at ppanckhurst@bloomberg.net