views

FTSE sunk by BP’s oil slick woes

Britain’s FTSE 100 share index fell yesterday, led down by energy shares as BP dropped again on fresh Gulf of Mexico oil slick worries and banks which were hit by Eurozone debt concerns and the threat of punitive taxes.

By the close the FTSE 100 was off 40.91 points, or 0.8 per cent at 5,028.15 after a choppy session, having recovered from an intraday low of 4,984.66.

“It has been a bit miserable again today, with the bad news over the past few days for BP, and the banks holding sway,” said David Morrison, market strategist at GFT Global.

“With the FTSE testing the psychologically and technically significant level at 5,000 ... it’s all a little bit worrying.”

Energy shares were the biggest blue-chip fallers, led lower by BP which dropped five per cent after US president Barack Obama said that he wanted to know “whose ass to kick” over the Gulf of Mexico oil spill, the worst enviromental disaster the US has faced.

Royal Dutch Shell, Cairn Energy, and Tullow Oil shed 0.5 to 1.2 per cent, failing to benefit from a firmer crude price, although BG Group added 0.5 per cent after a closing auction rally.

UK-focused banks were poor performers on twin concerns over the Eurozone debt situation, and the threat of possible levies on lenders.

European finance ministers sought agreement yesterday on how to make banks pay for financial crises.

Meanwhile, in a direct warning to British investors, ratings agency Fitch said the UK faced a formidable fiscal challenge, sending up the cost of protecting British government debt against default.

Lloyds Banking Group, Barclays, Royal Bank of Scotland, and Standard Chartered fell 1.9 to 4.1 per cent. But global bank HSBC added 0.6 per cent.

Retailer Tesco shed 2.4 per cent after long-standing chief executive Terry Leahy announced he would retire in March 2011.

Miners rose with a firming in metals prices following recent sharp falls. Fresnillo, Randgold Resources, BHP Billiton, Anglo American, and Antofagasta added 0.8 to 4.6 per cent.