Footsie slumps as BP crisis rolls on

LONDON FTSE 100 CLOSE 5,046.47 -53.76

THE Footsie sunk to its fourth losing session in a row yesterday as under-fire BP took another tumble into the red and US growth figures disappointed.

The stock fell as much as 9 per cent at one stage to hit a 14-year low amid worries over a short-term funding crisis in the wake of the Gulf of Mexico oil spill.

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Wall Street's Dow Jones industrial average also suffered after revised figures for the first quarter of 2010 showed the US economy had grown more slowly than expected.

The FTSE 100 followed it lower to finish 1.1 per cent or 53.76 points down at 5,046.47.

Yusuf Heusen, senior sales trader at IG Index, said: "Good news seems to be in short supply at the moment. It would not be a surprise if shares were still under some pressure when trading resumes on Monday."

Sterling edged higher to $1.494, although it was steady against the euro at 1.21 as investors also monitored developments at Canada's G20 summit of major nations. The banking sector was also in focus after US politicians agreed financial restrictions on derivatives trading that were less strict than some investors had feared.

Reports the industry had won lobbying efforts to pare back Basel III requirements for capital also helped some banking stocks in London. Asian-facing Standard Chartered lifted 2 per cent or 31.5p to 1,742p and HSBC added 4.7p to 641,8p.

However, other players failed to benefit with Lloyds Banking Group worse off with a fall of 2.1p to 54.2p.

BP was the biggest loser amid credit financing worries. The group, which also announced that Gulf of Mexico clean-up costs had reached 1.6 billion, fell 20.65p to 304.6p having fallen below the 300p mark at one stage.

Insuring BP's debt for five years now costs 5.85 per cent, up from just 0.4 per cent before the Gulf of Mexico oil slick.

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The group was joined on the fallers board by a host of other commodity stocks as oil and metals slipped on fresh jitters over global recovery. Miner Kazakhmys shed 43p to 1,067p.

Retailers were also under pressure after a post-Budget review of the sector by Morgan Stanley led to downgrades for a number of leading names.

They included WH Smith, which slipped 9.3p to 418.1p, and Halfords with a drop of 21p to 525p. B&Q-owner Kingfisher, which was also targeted by Morgan Stanley, fell 4.5p to 220.4p.

Market heavyweight Vodafone added some much needed support, up 1.15p to 144.05p as Collins Stewart lifted its recommendation to "buy". In the second tier, ground engineering specialist Keller was down 3.5p to 546.5p, losing gains made earlier as it said full-year earnings were on course to hit market forecasts.

Housebuilder and urban regenerator Berkeley Group edged up 1p to 801p after better-than-expected full-year profits of 110.3 million.

Michael Hewson, analyst at CMC Markets, said: "It is to be hoped that this weekend's G20 meeting will provide some much needed clarity to investors as we head into next week, but the signs aren't overly hopeful as a number of technical indicators on the various equity indexes are starting to show worrying signs of pushing markets lower."

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