London open: BP drags stocks into the red after posting annual loss

The FTSE 100 dropped on Tuesday, led by BP after the oil major reported its worst annual loss in 20 years amid a slump in oil prices.

BP's shares tumbled after it posted a full year loss of $6.5bn (£4.53bn), reflecting write-downs and restructuring charges. Fourth-quarter underlying profits fell to $196m (£136m), compared with $2.2bn for the same period the previous year. Yet BP held its quarterly dividend at 10 cents a share.

The company dragged shares of other oil producers into the red including Royal Dutch Shell, BHP Billiton and Tullow Oil.

“This morning’s results from BP have added to the gloom surrounding the sector…,” said Michael Hewson, chief market analyst at CMC Markets.

“As it stands BP had already announced 4,000 job losses earlier this year, with 600 in the North Sea as well as further capital expenditure cuts in an attempt to ride out the storm, but there is a worry that with a dividend yield of 7.3% and a dividend cover of 0.5 it could be susceptible to a cut in the coming months, particularly given how bad this morning’s results are.”

Fuelling the weak sentiment in the sector, oil prices continued to decline in morning trade with Brent crude down 1.3% to $33.78 per barrel and West Texas Intermediate down 1.7% to $31.07 per barrel.

In economic data, German unemployment fell 20,000 in January, compared to analysts’ estimates of 8,000 and the previous month’s 16,000 decrease. The unemployment rate unexpectedly fell to 6.2% from 6.3%.

At 0930 GMT the UK construction purchasing managers’ index will be released by Markit/CIPS. It will otherwise be a quiet day of economic reports.

Among corporate stocks, Ocado Group’s shares gained after it reported double-digit revenue growth for the year in the face of fierce competition.

Sainsbury’s advanced after agreeing a deal to buy Home Retail for about £1.3bn.

St Modwen declined as the developer announced the retirement of long-time chief executive Bill Oliver.

Market Movers

FTSE 100 (UKX) 5,983.62 -1.26%
FTSE 250 (MCX) 16,401.57 -0.53%
techMARK (TASX) 3,151.29 -0.58%

FTSE 100 - Risers

Hikma Pharmaceuticals (HIK) 2,086.00p 2.81%
Sainsbury (J) (SBRY) 247.60p 1.23%
TUI AG Reg Shs (DI) (TUI) 1,204.00p 1.18%
Sports Direct International (SPD) 420.00p 0.86%
Relx plc (REL) 1,235.00p 0.57%
Merlin Entertainments (MERL) 415.20p 0.36%
Admiral Group (ADM) 1,772.00p 0.23%
Smith & Nephew (SN.) 1,153.00p 0.00%
SSE (SSE) 1,432.00p 0.00%
InterContinental Hotels Group (IHG) 2,344.00p -0.04%

FTSE 100 - Fallers

BP (BP.) 341.50p -6.94%
BHP Billiton (BLT) 649.80p -4.17%
Royal Dutch Shell 'B' (RDSB) 1,463.00p -2.47%
Standard Chartered (STAN) 448.80p -2.43%
Rolls-Royce Holdings (RR.) 541.50p -2.43%
Old Mutual (OML) 163.00p -2.40%
Aviva (AV.) 464.60p -2.29%
Rio Tinto (RIO) 1,658.50p -2.21%
Smiths Group (SMIN) 919.00p -2.13%
Royal Dutch Shell 'A' (RDSA) 1,464.50p -2.01%

FTSE 250 - Risers

TalkTalk Telecom Group (TALK) 235.00p 7.85%
Ocado Group (OCDO) 274.40p 4.22%
Allied Minds (ALM) 313.40p 3.74%
Nostrum Oil & Gas (NOG) 279.90p 2.53%
UDG Healthcare Public Limited Company (UDG) 556.00p 2.02%
Brown (N.) Group (BWNG) 314.50p 1.85%
Barr (A.G.) (BAG) 545.00p 1.77%
Woodford Patient Capital Trust (WPCT) 89.80p 1.76%
Polypipe Group (PLP) 325.00p 1.28%
Riverstone Energy Limited (RSE) 759.50p 1.27%

FTSE 250 - Fallers

Weir Group (WEIR) 829.50p -4.38%
Tullow Oil (TLW) 165.00p -3.62%
Rotork (ROR) 163.50p -3.54%
Petrofac Ltd. (PFC) 765.00p -3.41%
Ophir Energy (OPHR) 87.00p -3.33%
Essentra (ESNT) 709.00p -3.14%
Victrex plc (VCT) 1,503.00p -2.78%
Aveva Group (AVV) 1,287.00p -2.72%
Amec Foster Wheeler (AMFW) 400.70p -2.48%
Just Eat (JE.) 350.60p -2.42%