Market Report: BP plummets after hurricane hits oil platform

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The Independent Online

The reason? Its important new floating oil rig in the Gulf of Mexico is listing at about 20 to 30 degrees after the passage of Hurricane Dennis at the weekend. The platform had been evacuated, so no one was hurt, but the possible extent of the damage was worrying investors.

BP shares fell 14.5p to 619.5p, its worst one-day performance this year and a significant drag on the FTSE 100, which ended lower yesterday.

The damaged rig, in the Thunder Horse oilfield, had been expected to begin production this year, producing 250,000 barrels of oil and 200 million cubic feet of natural gas every day. Yesterday, BP was surveying the site so see if the listing was the result only of waterlogging, or whether it has suffered more serious structural damage.

Goldman Sachs readied itself to shave 2 per cent from BP's production volumes this year regardless, and said if the platform sinks, long-term annual production growth could be reduced from 3 per cent to 2 per cent.

Shell was also sold off, despite the rebound in the oil price. Its shares ended down 6.75p at 542p, typical of a day of profit-taking by short-term investors. Traders cashed out of stocks that have been the subject of bid rumours over the past few weeks, with the US-focused fund manager Amvescap (down 8.5p at 424.25p) and ITV (down 3.25p) among the notable fallers. More brokers cut forecasts for advertising revenue at ITV, fearful of a consumer slowdown. The FTSE 100, which had hit a three-year high on nine of the previous 10 sessions, ended yesterday down 25.2 points at 5,217.2.

"Quantitative stock selection work" may not be the raciest way of playing the stock market but it can sure get a share price moving. Lehman Brothers has been running the numbers - lots of numbers - on Reckitt Benckiser and whichever valuation measure you use, the stock looks inexpensive. The maker of Harpic loo cleaner and Vanish stain removal spray offered the best combination of risk and return after a screen of the European household and personal care stocks, Lehman's number-crunchers conclude. Reckitt, up 33p to 1,643p, was one of the best-performing blue chips.

Mobile phone shares continued to be in strong demand before the latest customer figures due between now and the end of the month. Vodafone, which is taking analysts to see its German operations tomorrow, was up 1.5p at 142.5p, and O2 bubbled 2.25p higher to 138p. Investors also followed ABN Amro's advice to buy Virgin Mobile, up 5.25p to 260p, after the bank said they have nothing to fear from new customer tariffs.

Are bid talks off at Sanctuary Group? The music company has been anything but a safe haven for investors because of accounting questions and a profits warning last month blamed on delayed album releases. But its shares have been partially supported by the fact that it is in bid talks, widely believed to be with its larger rival EMI. Yesterday's rumours over the future of the negotiations were triggered by gossip that one well-informed punter has taken out a ballsy spread bet against Sanctuary shares. They closed down 1.25p at 23.75p. EMI was a ha'penny lower at 255p.

There was more optimism over a possible bid for Whittard of Chelsea, the tea and coffee retailer, which admitted that it was in talks plural. Its shares got a caffeine hit and a half, up 27p to 121.5p. Some analysts were speculating that Lindt & Sprungli, the Swiss chocolate maker with whom Whittard has a business venture, might be among the bidders. There was also talk that Canada's wealthy Weston family could also have made an approach. The mooted takeover figure was 150p a share.

Quadnetics rose 2.5p to 252.5p amid suggestions that the maker of CCTV systems would win new orders for cameras for buses, given the events of last Thursday in London. Stagecoach (down 1.5p to 113.5p), Arriva (off 5.5p at 552p) and National Express (10.5p lower at 889.5p) were among the London bus operators where investors are worried that passenger numbers could decline.

The US banking giant Citigroup was heard to have placed a line of 7 million shares in Serco, the outsourcing giant which runs the Docklands Light Railway in London and a string of government science operations. The shares represented about 1.5 per cent of the company, which has long attracted a high stock-market valuation.

There were rumours of imminent profits warnings unsettling some of the smaller stocks, too. Mice, a marketing group, was off a penny at 23.25p, and Superscape, a maker of virtual reality software, dropped 0.5p to 25p.