FTSE rises as oil spill is capped and BP share climb

After months of scrutiny, an onslaught of criticism from the US Government and failed attempts, BP (LON:BP ) has confirmed it has stopped the oil leaking from the damaged deep-sea well in the Gulf of Mexico. The cap is only a short-term solution until a new relief well is completed around mid-August but, despite BP’s restrained celebrations, investors have reacted positively and sent the share price over three per cent up.

BP’s US listed shares jumped nine per cent on Wall Street following the announcement last night. And when the London market opened this morning the stock rose over seven per cent, gaining 30p.

The oil giant, which has been under-fire since a rig explosion damaged the well on April 20, released a statement yesterday saying: “The well integrity test will last at least six hours and could last up to 48 hours. During the test, the three ram capping stack is closed, effectively shutting in the well and all sub-sea containment systems (namely, the Q4000 and Helix Producer systems) have been temporarily stopped. Although it cannot be assured, it is expected that no oil will be released to the ocean during the test. Even if no oil is released during the test, this will not be an indication that oil and gas flow from the wellbore has been permanently stopped.”

The capping should be the start of some respite for the oil firm and may help continue the regeneration of the group’s share price after it fell from the 650p marker to a frighteningly low 302p during the spill.

At 10:30BST the share price in the oil firm has stabilised at 3.5 per cent up, adding 14p to reach 416p.

Also joining BP at the peak of the FTSE climbers chart is Burberry (LON:BRBY) after the group announced earlier that it would be buying out 50 franchise stores in China for £70m.

The fashion retailer said it was part of the group’s new strategy of unifying the brand worldwide and increasing its exposure to “high growth luxury markets”.

The news comes on the back of the firm releasing a Q1 announcement reporting a revenue increase of 24 per cent to £282m earlier in the week.

The share price has boomed today, currently up 2.5 per cent with a gain of 20p.

Also showing a good share price improvement is British Airways (LON:BAY) after the EU Commission gave a thumbs up to a merger between BA and American Airlines.

A resulting deal would mean the two airlines would be able to co-ordinate their transatlantic schedules, work together on ticket pricing and also share revenue.

The EU Commission also approved BA’s merger with Spanish airline Iberia, punting the share price 2.5 per cent higher.

At the other end of the scale, banking stocks are anchoring the index down as the sector continues to be hampered by downbeat US corporate results.

Barclays (LON:BARC) and Lloyds Banking Group (LON:LLOY) lead the fallers chart for blue-chip groups, down 2.2 per cent and 1.6 per cent respectively. Royal Bank of Scotland (LON:RBS) is also down in the region of 0.15 per cent.

The FTSE 100 has gained 33 points at 10:30BST, up 0.6 per cent to 5,242.77.

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