BRITAIN’S top shares rose yesterday after the European Central Bank cut interest rates and announced plans to buy assets in a bid to shore up Eurozone inflation. However, steep falls in BP capped gains.
BP shares fell 5.9 per cent to 455p, suffering their biggest one-day percentage drop since June 2010, after a judge in the United States said the oil major had been “grossly negligent” for its role in the 2010 spill in the Gulf of Mexico.
The share price drop wiped some $8.7bn off the company’s market capitalisation. The ruling could add billions of dollars in fines to the more than $42bn in charges taken so far for the worst offshore disaster in US history.
Traders took the view that the share price drop would prove relatively short-lived.
“Obviously the market’s not taken it well and it was a little bit unexpected… [but] it is a short–term concern; longer term BP are cash generative and I’m sure they’ll have the funds to pay for this,” TJM Partners’ head of trading, Manoj Ladwa, said.
The index, which briefly hit a 14-and-a-half-year high at 6,904.86, closed up 4.39 points, or 0.1 per cent, at 6,877.97.
The market was given a fillip earlier in the session when the ECB unexpectedly cut interest rates to new record lows and the bank’s president Mario Draghi said it would start buying securitised loans and covered bonds next month to help unblock lending in the Eurozone.
Other sharp movers included Standard Life, which surged 8.1 per cent to 417.20p in brisk trade after agreeing to sell its Canadian operations.
The UK life insurance index climbed one per cent following Standard Life’s deal worth about C$4bn (£2.25bn) in cash with Manulife Financial.
Trading volume in Standard Life stood at almost seven times its 90-day daily average.
The companies said they would also expand an existing wealth and asset management partnership, with Manulife distributing Standard Life funds in Canada, the US and Asia, and Standard Life doing the same in the UK retail market.
Supergroup was the biggest winner on the FTSE 250, up 14 per cent to 1,191p, after the fashion retailer said that sales jumped 16 per cent in the three months to the end of July.
Paddy Power shares fell 0.38 per cent to €52.30 after Ireland’s biggest bookmaker named Andy McCue as its next chief executive.