UPDATE 2-Natixis returns to profit after series of losses

* Q3 net profit 268 mln eur vs avge Rtrs forecast of 488 mln

* First time bank has made profit since Q1 2008

* Expects to be profitable again in Q4

(Adds comments from Natixis executives, fund manager)

By Sudip Kar-Gupta

PARIS, Nov 12 (Reuters) - French investment bank Natixis (CNAT.PA) has made its first quarterly profit in over a year as a rebound in financial markets helped it recover from a series of losses.

Natixis, 72-percent owned by France's second-biggest retail bank BPCE, reported on Thursday a net profit of 268 million euros ($401.9 million), compared with a loss of 234 million euros a year ago.

Its earnings were also helped by previously announced plans to slash costs, which have entailed around 1,000 job cuts, and Natixis expected to be profitable again in the fourth quarter.

"We hope to make another profit in the fourth quarter," Natixis chairman and BPCE head Francois Perol told reporters.

A move by parent bank BPCE to provide a safety net for 35 billion euros of Natixis's toxic assets has also helped stabilise the financial position of the company, which booked large writedowns during the global financial crisis.

A Reuters poll of nine analysts had given an average net profit forecast of 488 million euros, although forecasts had raged widely from 26 million to 764 million euros.

Valerie Cazaban, the head of fund management firm Stratege Finance, said the market reaction to Natixis's results was likely to be mixed since the earnings had come in below forecasts.

"Making their first profit after five consecutive quarters of losses is good but it's still below expectations," said Cazaban, whose firm owns Natixis shares.

SHARES STILL BELOW FLOTATION PRICE

Natixis, which was France's worst-performing bank stock during the last two years, rounded off a solid set of third quarter results from the country's main banks which have all benefited from the market rebound to post profits.

BNP Paribas (BNPP.PA), France's biggest bank by market capitalisation, led the way with a third-quarter net profit of 1.2 billion euros.

Societe Generale (SOGN.PA) had a net profit of 426 million euros while Credit Agricole (CAGR.PA), France's biggest retail bank, turned in a profit of 289 million euros.

Although Natixis shares have risen by around 240 percent since the start of 2009, it has consistently traded well below the 19.55 euros level at which Natixis made its debut on the Paris stock market in December 2006.

Worries over Natixis led the French government to push through a merger of its controlling banks, Groupe Caisse d'Epargne and Banque Populaire, to create the new BPCE bank.

President Nicolas Sarkozy also drafted in Perol, one of his former key aides, to run the new BPCE company.

Natixis's shares rose 2 percent to 4.26 euros on Thursday, giving the group a market capitalisation of around 12.4 billion euros. ($1=.6668 euros) (Editing by Greg Mahlich)