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Friday 22 June 2018

BP’s Deepwater Horizon hit drags FTSE 100 lower

The FTSE 100 ended the day down 0.17% or 13.21 points at 7,755.93 points.

BP shares dragged on the FTSE 100 (PA)
BP shares dragged on the FTSE 100 (PA)

By Kalyeena Makortoff, Press Association City Reporter

The FTSE 100 fell into the red on Tuesday due to a drop in commodity stocks, including oil giant BP which took a £1.2 billion hit from its Deepwater Horizon disaster.

The blue chip index ended the day down 0.17% or 13.21 points at 7,755.93 points, weighed down by miners including Fresnillo, Rio Tinto, and Antofagasta.

The stocks were hit by a downgrade by HSBC, which cut the likes of Rio Tinto to ‘hold’ from ‘buy’, as it said that recent share price gains had diminished potential for further growth.

David Madden, a market analyst at CMC Markets UK, said: “The FTSE 100 is being held back by the commodity-related companies, as the rest of Europe has a strong session.

“The London equity benchmark has a relatively high exposure to the commodities markets, and the decline in BP, Rio Tinto, Glencore and BHP Billiton are keeping the index in the red.”

Oil giant BP was among the index’s worst performers, down 14.4p at 518.3p after booking another 1.7 billion US dollar (£1.2 billion) charge from the Deepwater Horizon oil spill in 2010 as part of the settlement for the disaster.

BP said cash payments related to the blast – which killed 11 rig workers and led to millions of gallons of oil being spewed into the Gulf of Mexico – are now expected to be around 3 billion US dollars (£2.2 billion) in 2018, rather than its previous estimate of just over 2 billion US dollars (£1.5 billion).

In currency markets, sterling lost its shine against the US dollar to trade more than 0.1% lower at 1.377.

It comes just a day after it pushed past 1.38, hitting its highest level against the greenback since the day following the Brexit vote in June 2016.

Versus the euro, the pound was relatively flat at 1.124.

The pound lost ground after the Office for National Statistics (ONS) released data showing that the Consumer Prices Index (CPI) eased to 3% in December, down from 3.1% in November.

It was the first drop since June with many economists saying Britain’s soaring inflation has now peaked following sterling’s collapse since the Brexit vote.

Across Europe, the French Cac 40 and German Dax rose 0.08% and 0.35%, respectively.

Brent crude fell 1.4% to 69.21 US dollars per barrel, as investors cashed in on the commodity’s price rise.

Oil prices rose above 70 US dollars per barrel a day earlier to trade at its highest level since late November 2014.

In UK stocks, GKN rose 4.6p to 442p despite the firm’s pension trustees warning suitor Melrose of a mammoth deficit in its pension schemes as it pushes for a takeover.

Greggs climbed 31p to 1,336p after the high street chain revealed plans to ramp up shop openings following a solid performance in 2017, while Provident Financial plunged 116p to 804p on news that its consumer arm will book full-year losses due to what it said was a poorly executed change of strategy.

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Greggs

JD Sports jumped 24.4p to 389.9p as the sports retailer hiked its full-year profit outlook for the second time in four months, and revealed 3% like-for-like sales growth across its stores in the second half.

Investors were also excited about an upgrade to annual results for estate agent Savills prompted in part by resilience in its residential transaction business in the UK, helping bump its shares up 37.5p to 1,003p

The biggest risers on the FTSE 100 were Johnson Matthey up 91p at 3,300p, NMC Health up 70p at 3,102p, Associated British Foods up 63p at 2,891p, and J Sainsbury up 5.3p at 256.2p.

The biggest fallers on the FTSE 100 were Fresnillo down 49.5p at 1,378.5p, Rio Tinto down 126p at 4,046.5p, Antofagasta down 29p at 1,009.5p, and BP down 14.4p at 518.3p.

Press Association

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