Oil stocks battered in market storm

WOES continued yesterday for Aim-quoted Bowleven after the Edinburgh-based oil and gas explorer notched up its third double-digit drop in four days as analysts questioned the value of its Cameroon discoveries.

The explorer closed down a further 15.2 per cent or 25p at 140p - the stock had opened at 261.5p on Monday morning but has seen about 260 million wiped off its market value so far this week.

Fellow Scottish oil stocks also suffered falls as oil prices tumbled by 5 per cent amid fears the United States could slip back into recession, denting demand.

Edinburgh's Cairn Energy slid a further 7.3 per cent following Wednesday's 5 per cent decline, which came after the explorer abandoned a well off the coast of Greenland where it failed to find oil. Cairn closed down 24.3p last night at 310.5p, having lost nearly 600m in value over the past two days.

Faroe Petroleum was down 3.9 per cent or 5.75p at 141.5p while fellow Aberdeen-based oil stock Xcite Energy dived 14.2 per cent or 20.75p to 125p having awarded options over 1.85 million shares to directors and managers who on Wednesday submitted its development plan to the UK government for the Bentley field in the North Sea. Melrose Resources was down 6.1 per cent or 12p at 184p, while oil support services giant Wood Group fell 37p or 5.9 per cent to close at 587.5p. Oil majors were also in the doldrums, with Shell sinking 5.2 per cent or 109.5p to 2,003p and BP 12.5p or 2.9 per cent lower at 420.5p.

Falls for the oil stocks came as part of the wider market sell-off as the FTSE 100 index closed down 3.4 per cent or 191.37 points at an 11-month low of 5,393.14 over eurozone debt fears. The slump was the biggest one-day decline since March 2009.

Will Hedden, sales trader at IG Index, said: "Traffic was one-way: sell, sell, and sell. A brief rally on the open was quickly dashed and shares steadily moved lower throughout the session."

Gold rose to $1,665 an ounce as investors searched for safe havens. Gold miner Randgold Resources was one of only four FTSE 100 risers as it confirmed new mines were on track to boost production - just as prices hit record highs. Shares jumped 6 per cent, or 365p, to 5,920p. The pound, seen as a safe haven, rose to €1.15 against the euro, but fell to $1.63 against the dollar.

Global growth fears hit the heavily-weighted mining sector. Vedanta Resources dropped 154p or 9 per cent to 1,486p while Kazakhmys saw a decline of 100p to 1,099p and Xstrata fell 101p to 1,085p. Glasgow-based engineering giant Weir Group - a big supplier of equipment used by miners - plunged 156p or 7.7 per cent to 1,860p.

The biggest slide came from satellite operator Inmarsat after it cut its growth expectations for its maritime business. Shares fell 19 per cent or 94.4p to 394.5p.

Lloyds Banking Group led the banking sector downwards after it reported a bottom-line loss of 3.3 billion.Shares fell 4p or 10 per cent to 35p - a long way from the 63p at which the Treasury would break even on its 40.2 per cent stake.

Investor Andrew Burgess continued to buy shares in Fife-based shopfitter Havelock Europa, snapping up a further 215,000 for about 31,000 to take his stake to 17 per cent.