BP weighs on FTSE after striking Rosneft deal

Shares in BP (BP.L) were among the biggest fallers on a declining FTSE 100 after the London-listed oil major agreed to sell its stake in TNK-BP to Rosneft, partly in exchange for a share of the Russian state-owned energy company.

BP is selling its 50% stake in TNK-BP to Rosneft in exchange for $17.1 billion in cash, shares representing 12.84% of Rosneft and two seats on the board. It will use $4.8 billion of the cash to buy a further 5.66% of Rosneft from the Russian government, BP added in a statement this afternoon.

The deal brings speculation about BP’s plans in Russia to an end, but shares dropped 2.1% to 440p having already made gains amid press reports of a deal last week. Analysts questioned how long it would take for BP to reap the benefits of the deal, while adding that the investment case for BP remains clouded ahead of a settlement with the US government over the 2010 Gulf of Mexico oil spill.

Caterpillar gives mixed signals

The broader FTSE 100 was lower after a sell-off on Wall Street on Friday and after declines on Asian markets, which were hit by data showing Japan’s exports fell at the fastest pace since last year’s post-earthquake slump. The yen fell for an eighth straight day as investors placed their bets on more Japanese central bank stimulus.

With little further economic news on Monday to provide direction – US GDP numbers and the Fed’s FOMC meeting are due later this week – investors were watching third-quarter earnings reports to dictate sentiment.

US markets made small gains after Caterpillar – the construction machinery maker that is seen as a corporate bellwether – reported better-than-expected results, but a disappointing outlook.

Aggreko and Petrofac downgraded

In London, BP may have been grabbing headlines, but there were bigger blue chip fallers. Aggreko (AGGK.L), the world's biggest temporary power firm, fell by 3.5% to 2,061p after JP Morgan cut its target price for the shares.

Shares in Petrofac (PFC.L) were down by 1.8% to 1,585p after Liberum cut its rating on the shares to ‘hold’ from ‘buy’.

Miners, however, were on the rise. Randgold Resources (RRS.L) made the biggest gains, up 2.4% to 7,595p, after Societe Generale raised its target price for the shares from 7,600p to 9,000p.

Fresnillo (FRES.L) was 1% higher to 1,913p and Antofagasta (ANTO.L) rose by 0.7% to 1,312p.

Euro gains

In Europe, the euro rose by 0.4% to $1.3063 after regional Spanish elections were seen as showing renewed support for Mariano Rajoy’s government. European share markets fell though, with Spain’s benchmark index down 0.4%, France 0.6% lower and Germany off by 0.8%.