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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, 09:03 UK *Chart shows local time More data on this share price BP Last updated: 10 Jun 2010, 09:19 UK *Chart shows local time More data on this share price
BP shares plunged 12% at the start of London trading before recovering, on fears that President Obama will impose huge 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 345 pence - its lowest level since 1997 - before recovering to 370p in early trading. BP's share price opened at 345 pence - its lowest level since 1997 - before recovering to 375p in early trading.
The latest drop comes amid fears of damage to the UK's reputation 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. US interior secretary Ken Salazar said that BP should compensate other oil companies that have had to lay off workers because of a moratorium on deep sea drilling announced by President Obama in response to the Gulf of Mexico spill.
Meanwhile, associate attorney general Thomas Perelli told a congressional hearing that the Justice Department was planning to take action to force BP to withhold its next dividend payment.
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 UK reputation 'National concern'
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.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.
"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 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 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.""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". President Obama and other US politicians have repeatedly referred to BP as "British Petroleum", even though the company has not used this name since 1998.
Market nerves were also reflected in the value of BP's bonds, which now trade at levels comparable with junk-rated companies. Dividend fears
This is despite the company continuing to enjoy high "investment grade" ratings from all three major ratings agencies. BP is jointly listed on the New York Stock Exchange - and trading in its US shares closed nearly 16% down on Wednesday night.
The sharp fall in BP's share price is bad news for UK pension funds, which invest heavily in the firm. BP said it was not aware of any reason why its US shares had fallen so sharply
In response to the sharp fall in the US, BP said it was "not aware of any reason which justifies this share price movement".
In its latest update on the spill, the oil giant said that the total actual cost to date was some $1.43bn (£1bn).
This compares with a total of £55bn that has been wiped off BP's value since the spill began.
The drop in BP's share price is bad news for UK pension funds, which invest heavily in the firm.
The oil company has said that it pays £1 in every £7 of dividends that pension funds receive from FTSE 100 companies.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. Thursday's opening losses follow a 4.5% slide in BP shares in the UK on Wednesday over fears of a dividend cut. Its next dividend is due to be declared on 27 July.
Market nerves have also been 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.
Takeover target?
Speculation is growing that BP's depressed share price may make it a target for a possible takeover.
"I can understand exactly as to why somebody else would want to buy the BP assets because I think they are grossly undervalued at the moment," said Robert Talbot of Royal London Asset Management, a BP shareholder.
"As a shareholder, it's not something that I would welcome and it's certainly not at this sort of share price I would be willing to sell at."
In a recent research note, Standard Chartered suggested that PetroChina - a subsidiary of China's state-owned national oil company - should make a bid for BP in order to gain a global presence.