FTSE falls as BP spill woes drag down energy sector

By David Brett

LONDON (BestGrowthStock) – Britain’s top shares fell on Wednesday as BP’s (BP.L: ) Gulf of Mexico oil spill woes weighed on the energy sector, and pessimism over global economic growth dragged risk-sensitive miners and banks lower.

By 1052 GMT, the FTSE 100 (.FTSE: ) was down 48.49 points, or 0.9 percent at 5,114.81, having ended 0.5 percent down on Tuesday, its lowest close since May 26.

BP (BP.L: ) fell 2.3 percent, adding to Tuesday’s 13 percent drop, as the United States launched criminal and civil probes into the six-week-old oil spill in the Gulf of Mexico.

BP has lost more than a third of its market value, or about 46 billion pounds ($67 billion), since the crisis began.

“The FTSE seems to be trading on raw emotion at the moment – most notably that of fear,” Will Hedden, sales trader at IG Index said.

“Today’s wide-ranging losses testify to a general bearishness, with the crisis in the Gulf of Mexico simply amplifying widespread pessimism in markets.”

Concerns over the long-term implications of the catastrophe hit other energy issues. Crude oil shed 0.5 percent, while Royal Dutch Shell (RDSa.L: ) and BG Group (BG.L: ) dropped 1.7 and 2.3 percent respectively.

Oil explorer Cairn Energy (CNE.L: ) was down 2.3 percent, while Tullow Oil (TLW.L: ) lost 1.0 percent, its fall cushioned by a Citigroup upgrade to “buy.”

Meanwhile, West African-focused oil explorer Afren (AFRE.L: ) was a strong mid-cap gainer, up 1.6 percent, supported by rumors that BG Group could launch a 140-pence-a-share cash offer, the Daily Mail’s Market report said.

Miners were weaker as metal prices fell and investors shied away from economy sensitive companies. Kazahkmys (KAZ.L: ), BHP Billiton (BLT.L: ) and Anglo American (AAL.L: ) lost 1.7 to 2.2 percent.

Banks, blighted by recent euro zone debt problems, lost more ground, with Royal Bank of Scotland (RBS.L: ), Barclays (BARC.L: ) and Lloyds Banking Group (LLOY.L: ) down 2.1 to 2.7 percent.

PRU UNDER FIRE

Prudential (PRU.L: ) fell 2.9 percent after it abandoned its plan to buy AIG’s Asian life unit AIA for $35.5 billion, bowing to shareholder criticism over the price it had agreed to pay and leaving its management under pressure.

Ex-dividend factors knocked 14.73 points off the FTSE 100 index, mainly due to heavyweight Vodafone (VOD.L: ) losing its payout attractions, with National Grid (NG.L: ), Marks & Spencer (MKS.L: ), AB Foods (ABF.L: ), and Intertek Group (ITRK.L: ) also trading ex-dividend on Wednesday.

On the upside, defensively perceived issues — stocks that tend to remain stable under difficult economic conditions — made up the few blue-chip gainers.

Drugmaker GlaxoSmithKline (GSK.L: ) added 1.6 percent, helped by an upgrade to “buy” from “hold” by Jeffries.

Peers AstraZeneca (AZN.L: ) and Shire (SHP.L: ) added 0.8 and 1 percent respectively.

Imperial Tobacco (IMT.L: ) climbed 1.9 percent, while Compass Group (CPG.L: ), the world’s biggest caterer, rose 1.6 percent.

Diageo (DGE.L: ), the world’s biggest spirits group, gained 0.7 percent, with JP Morgan upping its target price.

British mortgage approvals rose slightly more than expected in April, suggesting housing market activity may be starting to pick up again after a slowdown at the start of this year.

U.S. stock index futures pointed to a higher open on Wall Street on Wednesday, following the previous session’s steep losses, ahead of the May U.S. Challenger layoffs report, due at 1130 GMT, a precursor to Friday’s U.S. non farm payrolls.

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(Editing by Louise Heavens)

FTSE falls as BP spill woes drag down energy sector