Oils drag FTSE down; BP hit by criminal probe

* FTSE down 1.5 percent

* BP drags oil stocks down as U.S. launches criminal probe

* Drugmakers higher; GlaxoSmithKline up on Jeffries upgrade

By David Brett

LONDON, June 2 (BestGrowthStock) – Britain’s top shares dropped
early on Wednesday, with energy issues the main losers as BP
(BP.L: ) fell after the U.S. government opened a criminal probe
into its massive oil spill in the Gulf of Mexico.

By 0835 GMT, the FTSE 100 (.FTSE: ) was down 79.57 points, or
1.5 percent, at 5,083.73, having ended 0.5 percent lower on
Tuesday, its lowest close since May 26.

BP (BP.L: ) fell 2.1 percent, having dropped 13 percent on
Tuesday, 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.

“There are murmurings that Obama may halt oil exploration in
the area, which severely knocked energy stocks … that has
followed through to all the risk assets,” Angus Campbell, head
of sales at Capital Spreads said.

Other energy issues suffered too as the crude price (CLc1: )
retreated, with Royal Dutch Shell (RDSa.L: ) shedding 2.2 percent,
while BG Group (BG.L: ) fell 2.8 percent, Cairn Energy (CNE.L: )
dropped 2.3 percent, and Tullow Oil (TLW.L: ) lost 1.0 percent.

Tullow’s decline, however, was moderated by a Citigroup
upgrade to “buy”.

Meanwhile, West African-focused oil explorer Afren (AFRE.L: )
was a strong mid-cap gainer, up 1.4 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 also a drag on the blue-chips, with the sector
lower in tandem with weak metal prices. Kazahkmys (KAZ.L: ), BHP
Billiton (BLT.L: ) and Anglo American (AAL.L: ) fell 2.2 to 2.9
percent.

Banks lost ground too as investors’ risk appetite waned,
with Royal Bank of Scotland (RBS.L: ), Barclays (BARC.L: ) and
Lloyds Banking Group (LLOY.L: ) down 2.1 to 2.7 percent.

PRU PARED

Insurer Prudential (PRU.L: ) lost 2.6 percent, paring gains
made in the previous session, after it said it was pulling out
of its bold $35.5 billion takeover of AIG’s (AIG.N: ) Asian life
insurance arm, ending a three-month battle with shareholders who
had argued the deal was over-priced. [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 percent, helped by
an upgrade to “buy” from “hold” by Jeffries.

Peers AstraZeneca (AZN.L: ) and Shire (SHP.L: ) added 0.4 and
0.1 percent respectively.

Imperial Tobacco (IMT.L: ) climbed 0.5 percent, while Compass
Group (CPG.L: ), the world’s biggest caterer, rose 1.6 percent.

Stock Market Report

(Editing by Erica Billingham)

Oils drag FTSE down; BP hit by criminal probe