FTSE falls, BP spill woes drag down energy sector

* FTSE down 0.9 percent

* Oils weak; U.S. launches BP oil spill criminal probe

* Banks, miners fall as

By David Brett

LONDON, June 2 (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.
[ID:nN02139553]

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 (CLc1: ) 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
rumours 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. [ID:nTOE65100R]

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.

Investment Analysis

(Editing by Louise Heavens)

FTSE falls, BP spill woes drag down energy sector