FTSE 100 holds onto gains as BP hit by 'final' $5.2bn oil spill charge
UK blue chips up 0.2%
The FTSE 100 maintained positive ground in morning trading today despite BP falling 2.8% as it revealed it had booked a further $5.2bn charge in Q2 for the 2010 Gulf of Mexico oil spill.
By 11am, the UK's blue-chip index was up by 0.2% to 6,721 points, led by BT Group, which rose by 4.9% to 406.45p after regulator Ofcom said its Openreach business did not need to be split off from the company.
Meanwhile, BP shares fell 2.8% to 428p as the firm said the total cost of the Gulf of Mexico oil spill has now hit $61.6bn. It said the latest $5.2bn charge will settle all remaining liabilities arising from the accident, in which 4.9 million barrels were lost over four months.
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In its latest results, BP posted a $720m underlying profit in Q2 after adjusting for non-operating items, down from $1.3bn in the same period last year.
The company will perservere with a 10 cents quarterly dividend despite adverse market conditions, as expected given the company's previous guidance.
Nicholas Hyett, equity analyst at Hargreaves Lansdown, said: "With gearing well within the newly widened 20%-30% range, BP can continue to pay the dividend if it really wants to, but it will become an increasingly tight constraint on the business.
"It looks like BP is betting on a speedy return to higher oil prices. If that appears, then BP will have protected its shareholders through the tough times. But if oil does not rebound, then BP will become progressively weaker in an environment where strength matters.
"If prices do recover, BP's lower cost base will serve it very well, and profits ought to recover rapidly, but for now, cost cutting is simply serving to limit the damage.'
Other losers in the FTSE 100 include supermarkets Tesco and Sainsbury, down 2.5% and 1.8% respectively, and Barratt Developments, which fell 1.9% to 410.9p.
Winners also included Mondi, which was up 3.4% to £15.18 and Hikma Pharmaceuticals, up 2.7% to £26.39.
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