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BP shares plummet on Obama fears BP shares plummet on Obama fears
(40 minutes later)
BP Last updated: 10 Jun 2010, 08:23 UK *Chart shows local time More data on this share price BP Last updated: 10 Jun 2010, 09:03 UK *Chart shows local time More data on this share price
Shares in BP have plummeted another 12% at the start of London trading, amid fears President Obama will impose massive penalties on the company. BP shares plunged 12% at the start of London trading before recovering, on fears that President Obama will impose huge penalties on the company.
It means the oil giant's share price has almost halved since the Deepwater Horizon oil spill began on 20 April.It means the oil giant's share price has almost halved since the Deepwater Horizon oil spill began on 20 April.
BP's share price opened at 348.6 pence - its lowest level since 1997 - before recovering to 360p in early trading. BP's share price opened at 345 pence - its lowest level since 1997 - before recovering to 370p in early trading.
Market attention is increasingly focused on the threat to BP posed by the political fall-out in the US. The latest drop comes amid fears of damage to the UK's reputation in the US.
In his latest comments, President Obama suggested that the oil company should pay unemployment benefits to thousands of oil workers laid off during a moratorium on deep-sea drilling triggered by the spill.In his latest comments, President Obama suggested that the oil company should pay unemployment benefits to thousands of oil workers laid off during a moratorium on deep-sea drilling triggered by the spill.
Further congressional hearings into the Gulf of Mexico oil leak are planned on Thursday.Further congressional hearings into the Gulf of Mexico oil leak are planned on Thursday.
BP said it was not aware of any reason why its US shares had fallen so sharply BP said it was not aware of any reason why its US shares had fallen so sharply UK reputation
The sharp fall in BP's share price is bad news for UK pension funds, which invest heavily in the firm. London mayor Boris Johnson expressed concern that the oil spill was beginning to damage the entire image of the UK in the US, and not just BP's.
The oil company has said that it pays £1 in every £7 of dividends that the pension funds receive from FTSE 100 companies. "I do think there's something slightly worrying about the anti-British rhetoric that seems to be permeating from America," he told BBC Radio 4's Today programme.
"I do think that it starts to become a matter of national concern if a great British company is being continually beaten up on the international airwaves," he added.
"I would like to see a bit of cool heads and a bit of calm reflection about how to deal with this problem rather than endlessly buck passing and name calling."
BP responded to the sharp price fall in the US, stating that, "the company is not aware of any reason which justifies this share price movement".BP responded to the sharp price fall in the US, stating that, "the company is not aware of any reason which justifies this share price movement".
Market nerves were also reflected in the value of BP's bonds, which now trade at levels comparable with junk-rated companies.Market nerves were also reflected in the value of BP's bonds, which now trade at levels comparable with junk-rated companies.
This is despite the company continuing to enjoy high "investment grade" ratings from all three major ratings agencies.This is despite the company continuing to enjoy high "investment grade" ratings from all three major ratings agencies.
Wednesday's losses followed BP shares sliding 5% on Tuesday after US President Barack Obama said he would have fired chief executive Tony Hayward over remarks he made. The sharp fall in BP's share price is bad news for UK pension funds, which invest heavily in the firm.
Mr Hayward made comments such as "I want my life back" and called the Gulf "a big ocean" in the wake of the disaster, which killed 11 people. The oil company has said that it pays £1 in every £7 of dividends that pension funds receive from FTSE 100 companies.
Thursday's opening losses follow BP shares sliding 4.5% in the UK on Wednesday over fears of a dividend cut.