Shell-shocked investors in BP saw shares fall by as much as 12% today as angry US politicians threatened a legal challenge to block it paying dividends.
The stock hit a 14-year low in New York overnight and plunged as low as 345p in London despite assurances that there was nothing to justify the sharp fall on Wall Street.
BP later stood 18.25p lower at 372.85p but the heavyweight stock hampered gains for the wider index, which was 11.9 points up at 5097.8.
The Bank of England’s decision to hold interest rates and its quantitative easing programme unchanged was widely expected by the market and had little impact.
Banking stocks came under early pressure after the Office of Fair Trading (OFT) announced a study into some of their fees and services, although they recovered as the session wore on.
The OFT said it planned to look at the equity underwriting market – where companies raise funds through share placings – after concerns were raised.
Royal Bank of Scotland was flat at 42.1p, Barclays picked up 4.7p to 287.4p and HSBC was 3.7p ahead at 645.3p.
In the consumer sector, Home Retail Group followed BP lower after it posted a disappointing trading update from its Argos business.
The catalogue chain said like-for-like sales were down 8.1% in the first quarter of its financial year, offsetting a solid performance at DIY arm Homebase. The shares, which have recently been helped by rumours of bid interest from Asda, were 10.5p lower at 227.5p.
Other retailers also endured a tough session, including B&Q owner Kingfisher which edged 0.1p down to 217.9p. Supermarkets were also on the back foot with Morrisons down 2.9p to 263.8p, Sainsbury’s off 3.2p to 321.4p and Tesco down 1.35p to 401.1p.
The leading Footsie riser was chip designer ARM Holdings, which surged 10% or 28.1p to 302.1p amid talk that US giant Apple was considering a potential bid.
Mining stocks also gained ground on the back of Chinese trade figures which helped the sector yesterday. Mining stocks were well represented among the risers with Eurasian Natural Resources and Kazakhmys adding 26p to 1008p and 28p to 1134p respectively.
In the FTSE 250, consoles and games firm Game Group was down 4.6p to 85.45p ahead of a looming trading update while publishing firm Trinity Mirror – whose relegation from the second tier was confirmed yesterday – was 3.95p lower at 82.45p.