BP shares fall sharply in London

BP shares drop by 8.9 per cent following an announcement that costs associated with the Gulf of Mexico oil leak have risen to $2.35 billion.

LONDON // BP shares fell sharply in London today following the company's announcement that the cost of responding to the Gulf of Mexico oil leak has risen to $2.35 billion (Dh8.6bn). The share price dipped as low as 296.6 pence during morning trading, an 8.9 per cent drop. That took the shares well below half of the 655 pence price on April 20, the day an explosion killed 11 workers on the Deepwater Horizon drilling rig.

Analysts at Collins Stewart continued to recommend BP shares as a "buy" in a research note released today. The company earlier this month had lowered its target price for BP to 450 pence, noting that the investment was "not one for the faint-hearted." BP said a containment cap was continuing to collect some of the oil and gas flowing from the seabed, following a 10-hour interruption on Wednesday. Even with the interruption, BP said the containment system collected or burned 16,830 barrels of oil.

US government experts estimate that the leak is spewing between 35,000 barrels to 60,000 barrels of oil into the gulf every day. Last week, BP bowed to president Barack Obama's demand that it set up a $20 billion escrow fund to cover damages and suspend dividend payments. * AP