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Markets fall for fourth successive day as BP woes return

Shares fall again as worries about the US economy and European sovereign debt weigh.

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by Deborah Hyde on Jul 19, 2010 at 09:10

New concerns about the state of the US economy and worries about European government debt dragged shares lower in morning deals.

The FTSE was down 18 points, or 0.35%, to 5140.6 with sharp falls in BP adding to the pain as investors fret ahead of UK growth data this week.

On Friday, the US Dow fell 261.41, or 2.52%, to 10,097.90 amid growing worries the US may be facing its own lost decade.

Investors in Europe remain nervous amid concerns the European stress-tests on banks will fail to convince investors that the banking system is strong enough to sustain more strain.

Results are due to be published on Friday, but most governments have already said their banks will pass adding to worries the tests were not rigorous enough to highlight how vulnerable some banks are to government debt and economic woes.

Adding to those worries was news over the weekend that the International Monetary Fund and the European Union refused to hand over a promised €20 billion to Hungary amid concern about the government's budget plans and news today that Moody's has downgraded Ireland's credit rating despite the government's aggressive spending cuts.

Michael Hewson, analyst at CMC Markets, said: 'If a warning were needed of the problems facing Europe this is a stark reminder and will do nothing to assuage investor concerns about the problems Europe has with respect to sovereign debt.'

In the UK the Rightmove house price survey showed a 0.6% month on month fall in house prices, dragging the annual rate of growth to 3.7% from 5% in June.

Economists said the fall suggested that the extra supply of homes for sale and the reluctance by banks to lend has called a halt to the recovery in house prices. Many still expect prices to end the year where they started it.

Government finance figures are due tomorrow and the first estimate of GDP growth for April to June is out on Friday.

Economists expect the numbers to show growth has picked up pace to around 0.5-0.6% in the second quarter.

In company news, BP led the fallers down 5.29% or 21.6p at 385.6p after US authorities said oil is still leaking from the company's well in the Gulf of Mexico - quashing hopes last week the group has finally capped the spill.

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9 comments so far. Why not have your say?

Or is this another effort from Obama's lot to force the share price down to pave the way for Exxon's bid?

After a working life in high level international business, and dealing with US authorities, nothing the Americans do surprises me!

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According to the BP web site there is no oil leaking. The live pictures from the sea bed also show that no oil is leaking and that the pressure is 6,775 lbs/sq in.

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Thought it was a seabed seep which they were asked to monitor that was the issue. The cap wont be "tried again", the pressure will be released by extracting oil/gas to the ships/storage above.

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Sorry, have i got this right. BP have successully capped the well, yet Obama is "reserving the right" to make them open it again if they are "not happy" with it?!

WHY?!

Its amazing how blatent he is being with efforts to influence BP's sp!

A true crook!

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If they are truly worried about the integrity of the seabed around the well then they should let the well flow to surface. It is quite clear from the pressure test data so far that the well-head equipment just installed is n't going to fail. But I think Obama wants to delay any flow to surface for as long as he can because it will give us a true answer as to what the well is capable of producing. I suspect it is far less then Obama's "experts'" hysterical back of the fag packet calculations of a month or so ago. (upto 100000 b/d) maybe more like 25,000 which would still make it a great well by GOM standards. The UK public will finally see that Obama and his team went the extra mile to make BP look as bad as possible in order to screw them for as much comp they could. A special relationship indeed David Cameron - but then fagging was in vogue when our PM was at school so I guess he's used to it.

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US are talking through their back*****, they are taking the P***.

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Its been very clear for sometime that the US government and congress have been making every effort possible to paint this problem in the worst possible light.

Their early guesses (I won't even use the word calculation/forecast) had no logical basis given that no well anywhere in the GOM has a flow rate anything like 100000b/d.

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Well it takes the heat off the incompetence of the obama administration and is a useful scapegoat and at the same time forcing down the asset prices owned by BP so the yank oil companies can steal them. Special relationship should be shoved up their backsides and pull your troops out of Afghanistan and let them get on with it on their own.

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Al Kent

Jul 20, 2010 at 11:06

did any of you know that BP was/is one of Obama's major campaign sponsor!?

so couldn't be that Obama's on his way out at next election? his backers are getting the squeez

...everyone forgets that Obama's just a party leader not a dictator, so he's little more than a figure head for the US "system" of governance!!

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