BP takes more of a bashing, down 9%

OIL giant BP was hit by a further sell-off yesterday despite wider gains for the FTSE 100 Index.

The group – whose board met to discuss a dividend cut for the first time in 18 years – surrendered all of Friday's 7 per cent advance and more to stand 9 per cent, or 36.45p, lower at 355.45p. The firm's woes belied a better session for most of the top flight's other commodity-based stocks, which helped the blue-chip index finish 38.45 points ahead at 5,202.13.

Across the Atlantic, Wall Street's Dow Jones Industrial Average added 1 per cent in early trading, while investors were cheered earlier by a 0.8 per cent monthly increase in industrial production in April across the 16-nation eurozone – a bigger rise than forecast which fuelled recovery hopes.

In the UK, the newly-created Office for Budget Responsibility (OBR) surprised traders by presenting a better-than-expected assessment of public finances.

The OBR said borrowing would be 155 billion this year – 8bn lower than in March's Budget – and 23bn lower over the five years to 2014-5. It predicted slower growth of 2.6 per cent in 2011 – prompting fears that deep cuts in the emergency Budget next week could plunge the UK into a double-dip recession. The pound strengthened on the better-than-expected borrowing figure, rising by just under 1 per cent to $1.475 against the dollar and 1.204 against the single currency.

Miners including Eurasian Natural Resources and Kazakhmys saw gains of 3 per cent or more, leaving shares in beleaguered BP far behind.

Commenting on the BP sell-off, David Jones, IG Index's chief market strategist, said: "With further news on whether the dividend is to be maintained not likely for at least a few more days, it would seem investors are losing their nerve about the potential for any short-term recovery."

Shares in Home Retail Group remained under pressure after last week's poor update from the owner of Argos. JP Morgan Cazenove became the latest broker to cut its rating. This caused shares to fall a further 1 per cent or 2.2p to 231.5p.

Supermarkets were also on the back foot ahead of a trading update from Tesco this morning. Tesco was 2.55p down at 391.65p, Sainsbury's shed 1.7p to 319.7p and Morrisons was 4p cheaper at 257.7p.

Outside the top flight, shares in Majestic Wine rose 7 per cent, or 19.5p, to 292p after the retailer popped the cork on a big rise in profits and said it planned to open 12 UK stores in the current financial year.

The biggest rise in the FTSE 250 Index came from Glasgow-based industrial valves and controls business Weir, which jumped 12 per cent, or 115.5p, to 1,066p after accompanying a strong trading update with the 138 million acquisition of a Malaysian firm.

Fellow Scottish stock Dana Petroleum was also on the rise, up 15p at 1,103p, after agreeing to buy Petro Canada Netherlands for 270m, the biggest deal in the Aberdeen-based oil and gas explorer's history.

Edinburgh-based Wolfson Microelectronics closed up 3.25p at 168.75p after announcing its chips were being used by electronics giant Samsung.