Shares in BP (BP) have risen to the top of the FTSE 100 as the oil giant pared heavy losses suffered yesterday after a US judge ruled it was 'reckless' in its handling of the Gulf of Mexico oil spill.
Shares have jumped 1.9% to 463.9p, paring some of yesterday's 5.9% drop on the ruling, which could leave the company facing hefty fines on top of the $42 billion it has already set aside following the disaster.
New Orleans judge Carl Barbier ruled BP was mostly at fault for the spill and that two other companies in the case, contractors Transocean and Halliburton, were less to blame.
Barbier has not yet ruled on damages. However, calculations by Reuters have shown the company could face costs amounting to $18 billion. BP said it would appeal the ruling.
Analysts at Liberum said yesterday's share price falls appeared too heavy. 'The share price fell by 29p on the news. This may look overdone given a maximum fine estimated at $18 billion (ie 58p, or 47p excluding $3.5 billion already provisioned) which may be reduced by several factors and that the market has already discounted some level of penalty,' they said.
Jefferies analysts meanwhile said BP's dividend was unlikely to be put at risk due to the news. 'Even in the event of a maximum fine, we believe that BP has sufficient liquidity to meet its obligations,' they said.
'We expect a worst case scenario of fine level would not be paid in the near term; we would expect a lengthy appeal process first. We thus do not believe there is a risk to the current BP dividend.'
The FTSE 100 was trading 27 points, or 0.4% lower, at 6,849. After steadily falling during the day, the bulls briefly held the ascendancy in the afternoon's trading as the US reported jobs figures that were much worse than expected, weakening the case for an interest rate rise.
The US Department of Labor reported that just 142,000 jobs were added in August, way below the 225,000 investors had been expecting.
'A disappointing employment report for August gives US policymakers more food for thought about when the economy might be capable of withstanding higher interest rates,' said Chris Williamson, chief economist at Markit. 'The slowdown in hiring certainly vindicates the Fed's cautious approach to tightening policy.'
Miners were among the biggest fallers on the FTSE 100 as they were hit by a drop in the gold price, hovering near three-month lows at $1,264 an ounce. Randgold Resources (RRS) fell 3.2% to £47.84, Fresnillo (FRES) shed 3.8% to trade at 874.5p, Rio Tinto (RIO) dropped 1% to £32.10 while BHP Billiton (BLT) dipped 0.9% to £18.87.