BP shares bounce back in London trading

[June 11, 2010]  LONDON (AP) -- Shares in BP PLC opened higher in London on Friday, a day after a sharp drop linked to the company's difficulties with an oil leak in the Gulf of Mexico was reversed in New York.

BP shares were up 7.5 percent at 393 pence in late morning trading on the London Stock Exchange, rebounding from a 13-year low in early trading on Thursday.

In New York on Thursday, the stock closed 12.3 percent higher, clawing back some of the losses from a 15.8 percent rout on Wednesday.

BP shares have fallen from 655.4 pence just before the April 20 explosion on the Deepwater Horizon rig that killed 11 people. They started the week at 433 pence.

BP has come under heavy pressure from President Barack Obama and his administration to suspend its dividend, a possibility which soured investor sentiment.

The latest fall came after U.S. Interior Secretary Ken Salazar said he would ask BP to compensate energy companies for losses if they have to lay off workers or suffer economically because of a six-month moratorium on deep-water drilling imposed by the Obama administration following the rupture at BP's well.

The chief executive of Britain's National Association of Pension Funds said Friday that investors might be receptive to a suspension of dividends to protect the company's long-term future. Joanne Segars told the BBC that BP's "long-term" future was far more important.

"BP's current difficulties shouldn't have an immediate or serious impact on those saving into a pension scheme or on those who have retired," said Segars, the association's leader.

Some analysts are already predicting a cut in BP's dividend. Evolution Securities said Thursday that it expected the current year payout to be 28 cents a share, half of the previous year's level, but they continued to recommend the shares as a "buy."

"We fully agree with our fundamental analysts' view that BP can afford to pay the dividend and that they should pay the dividend," said Evolution Securities said in a research note. "However, there is mounting political pressure focused on the issue of the BP dividend and in light of this we believe it is prudent for income-dependent investors to plan for a cut/suspension going forward."

The White House on Thursday released a letter inviting BP Chairman Carl-Henric Svanberg and "any appropriate officials from BP" to meet Wednesday with senior administration officials.

Coast Guard Adm. Thad Allen, who leads the U.S. government response to the crisis, said Obama would participate in a portion of the meeting.

Obama has yet to meet with any BP official since the explosion.

Gibbs earlier in the day did not rule out the possibility of a meeting next week between Obama and BP Chief Executive Tony Hayward. Hayward is scheduled to testify next Thursday at a House Energy subcommittee hearing into the spill.

Meanwhile, BP announced a grant of $25 million to the state of Florida to support the state's contingency plan to deal with a leak from a BP well. BP said late Thursday that it had previously given the state $25 million for contingency planning and the same amount to help the tourist industry.

[Associated Press; By ROBERT BARR]

Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.