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Market report: BP put under pressure after it takes a $3bn hit from asset sales

BP

Energy giant BP slumped yesterday after admitting it would take a hit of up to $3bn (£2.4bn) from asset sales and warning that a storm in the Gulf of Mexico had dented its production over summer.

BP, which last week announced the departure of chief Bob Dudley after nearly a decade, is looking to sell off non-essential assets worth around $10bn by the end of 2019, one year ahead of schedule.

The company sold its entire Alaska business to Houston-based Hilcorp Energy for $5.6bn and has also signed a deal to ditch some of its legacy gas assets from its US Lower 48 business, which has been rebranded as BPX Energy.

Biraj Borkhataria, an analyst at RBC Capital Markets, said it was a difficult market for asset sales. BP was one of the biggest fallers on the FTSE 100, closing 1.68pc, or 8.45p, lower to 493.55p.

Meanwhile advertising giant WPP also sat among the large-cap laggards after a second profit warning from Publicis, a major competitor.

French firm Publicis cut its full-year guidance for the second time in three months, citing losses of US clients. It now expects sales to decline 2.5pc this year.

WPP shares tumbled more than 32.8p, or 3.4p, to 931p in response to the news, as investors worried the fresh warning might be indication of a slowdown in the wider industry.

Elsewhere British Airways owner IAG was towards the top of the risers on London’s benchmark index following its boss Willie Walsh saying he believes the £14bn third runway at Heathrow Airport is unlikely to go ahead despite finally winning approval from Parliament last year. Shares jumped 37.8p to 498.9p, a gain of more than 8pc.

The FTSE 100 had a moderate day overall, despite some huge gains from housebuilders and banks, in comparison to other markets in Europe. The index was weighed down by the strength of the pound which surged to a three and a half-month high.

It was also the pound’s biggest two-day rally since the vote to leave the EU in 2016, adding to Thursday’s gain which resulted in the currency’s steepest rise since March.

Michael Brown of Caxton said: “Sterling continues to strengthen across the board, gaining ground as markets price in the increased probability of a Brexit deal as a result of UK-EU discussions entering the ‘tunnel’ – a period of intense, confidential negotiations aimed at finalising a deal.

“Looking ahead, the less that is heard from the negotiations, the better the outlook for the pound.”

The FTSE 100 closed 0.84pc higher to 7,247.08 while the domestic FTSE 250 soared more than 4pc to 20,041.71.

The Stoxx Europe 600 index jumped the most since January.

Global stocks rose amid reports that the US and China reached a partial trade accord during the second day of talks in Washington.

Oil prices also climbed following an explosion on an Iranian tanker. The black stuff rose as much as 2.6pc during the day but later cooled to trade 1pc higher, with Brent Crude breaking above $60 (£47) per barrel.

Safe-haven asset gold was hit by the risk-on attitude of traders yesterday – the surge in global stocks encouraged traders to exit their gold positions, as well as government bonds.