Fresh fall in BP shares

BP overshadowed a decent start to the week for world markets as renewed dividend fears caused a fresh fall for the oil giant’s shares.

The latest shareholder payout is due in July, but with BP directors meeting in London to consider a possible suspension of the dividend shares lost a large slice of Friday’s recovery to stand 6% or 22.8p lower at 369p.

Other commodity-based stocks were higher, helping the FTSE 100 Index to rise 29.3 points to 5192.9, as investors cheered a rise in mineral and oil prices amid signs of a stronger economic outlook in Europe.

Markets were encouraged by a 0.8% monthly increase in industrial production in April across the 16-nation eurozone, a bigger rise than forecast.

In the UK, the newly-created Office for Budget Responsibility (OBR) surprised traders by presenting a better-than-expected assessment of UK public finances.

The OBR said borrowing would be £155bn this year – £8bn lower than in March’s Budget – and £23bn lower over the five years to 2014/5. It predicted slower growth of 2.6% in 2011 – prompting fears that deep cuts in the emergency Budget next week could plunge the UK into a double-dip recession.

The pound strengthened on the better-than-expected economic news, rising by just under 1% to 1.474 against the US dollar and 1.203 on the euro.

Miners including Eurasian Natural Resources and Kazakhmys were up by more than 2%, while Royal Dutch Shell overcame the latest turmoil at BP to rise 8.5p to 1722p – helped by a rise in oil prices to more than 75 US dollars barrel.

As well as the latest slump for BP, shares in Home Retail Group remained under pressure after last week’s poor update from the owner of Argos. JP Morgan Cazenove became the latest broker to cut its rating on the stock, causing shares to fall another 1.5% or 3.5p to 230.2p.

Outside the top flight, shares in Majestic Wine rose 5% or 15p to 287.5p after the retailer announced a big rise in profits and said it planned to open 12 new UK stores in the current financial year.

The biggest rise in the FTSE 250 Index came from industrial valves and controls business Weir, which jumped 12% or 115.5p to 1066p after accompanying a strong trading update with the £138m acquisition of a Malaysian firm.