UPDATE 1-Brazil's Petrobras says capital plan on track

* Petrobras says plan not slowed by European market woes

* Sees capital plan by first half 2010 (Adds details, background, comments from Gabrielli, paragraphs 2-5)

SAO PAULO May 11 (Reuters) - Brazilian state oil company Petrobras' oil-for-shares capitalization plan is on track to be launched as scheduled by the first half of 2010, Chief Executive Officer Jose Sergio Gabrielli said on Tuesday.

He said market turmoil in Europe linked to Greece's debt problems is unlikely to affect demand for the Petrobras (PETR4.SA)(PBR.N) shares to be offered as part of the capitalization.

"Moments of turbulence bring difficulties, but they also offer opportunities," he told reporters on the sidelines of an event in Sao Paulo.

Congress is still discussing the capitalization scheme under which the government would receive company shares in exchange for rights to develop unlicensed offshore oil blocks believed to hold 5 billion barrels. [ID:nN15306577]

Uncertainty over possible delays in approval and execution of the plan has boosted market jitters over the operation and led to several analysts' downgrades of the company's stock, which has underperformed the broader index. (Reporting by Marcelo Teixeira, writing by Brian Ellsworth; Editing by David Gregorio)