U.S. data limits FTSE’s losses; BP plunges

By Tricia Wright

LONDON (BestGrowthStock) – Britain’s top shares fell on Tuesday led by a plunge in BP (BP.L: ) shares after the company’s failure to stem an oil spill in the Gulf of Mexico, but they finished off lows thanks to upbeat U.S. construction data.

The FTSE 100 (.FTSE: ) closed down 25.13 points or 0.5 percent at 5,163.30, its lowest close since May 26, 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.

U.S. construction data, he said, illustrated this point.

Construction spending in the United States rose 2.7 percent, and investment in private construction surged 2.9 percent, the largest increase since July 2004. Also, the Institute for Supply Management’s manufacturing index expanded more than expected in May.

BP was the standout blue chip faller, off 13.1 percent 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 failed to stop the flow of oil.

The top kill strategy was BP’s best short-term shot at plugging the seabed well. BP’s remaining short-term options offer untried ways to contain the spewing oil but few ways to stop it completely.

Peer Royal Dutch Shell (RDSa.L: ) fell 0.6 percent.

BG Group (BG.L: ), however, put on 2.6 percent, 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 (BLT.L: ), Kazakhmys (KAZ.L: ) and Rio Tinto (RIO.L: ) were the worst off, dropping 1.2 to 2 percent.

But gold miner Randgold Resources (RRS.L: ) shone, adding 3.4 percent, after investors bought into gold as a haven from debt problems in the euro zone.

The European Central Bank warned on Monday that euro zone banks face up to 195 billion euros in a “second wave” of potential loan losses over the next 18 months.

Spain, the fourth-largest euro zone economy, saw its credit rating downgraded a notch by Fitch Ratings agency from the maximum AAA to AA+ late on Friday.

PRU ON TOP

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

Elsewhere among the risers, Scottish & Southern Energy (SSE.L: ) climbed 2.6 percent. The British utility has backed down from seeking a major stake in the UK networks being sold by France’s EDF (EDF.PA: ) after ruling out raising equity to finance any bid.

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(Editing by Andrew Callus)

U.S. data limits FTSE’s losses; BP plunges