Fears over BP’s survival drags FTSE 100 lower as the latest bid to plug leak fails

TOP shares fell yesterday led by a plunge in BP shares after the company’s failure to stem an oil spill in the Gulf of Mexico, but they finished off lows thanks to upbeat US construction data.

The FTSE 100 closed down 25.13 points or 0.5 per cent at 5,163.30, its lowest close since 26 May, in a choppy session in which the index dropped as low as 5,063.20.

“We are in the midst of an extraordinarily volatile period ... but I think you’ve got to look at the markets in the context of the broader fundamental picture, and I think when you do that, the backdrop is still reasonably promising,” said Mike Lenhoff, chief strategist at Brewin Dolphin.

BP was the standout blue chip faller, off 13.1 per cent after abandoning its “top kill” attempt to plug the well on Saturday after several attempts to pump thousands of barrels of mud down the well, seen as the best method, failed to stop the flow of oil.

Peer Royal Dutch Shell fell 0.6 per cent. BG Group, however, put on 2.6 per cent, bolstered by an upgrade to “buy” from “hold” by Societe Generale.

Miners were hit by weaker metals prices after China’s factories scaled back production last month and eased back hiring in response to a critical drop in new orders, sparking investor worries over demand.

BHP Billiton, Kazakhmys and Rio Tinto were the worst-off dropping 1.2 to two per cent.

Prudential topped the blue chip leader board, up 6.3 per cent, with its bid for rival AIG’s Asian unit close to collapse after the British insurer failed to secure a price cut, triggering talk it might itself become a takeover target.