LONDON MARKETS: BP Slides In London, Paring Gain For FTSE 100

By Carla Mozee, MarketWatch

LONDON (MarketWatch) -- BP PLC shares logged their largest decline in more than four years Thursday, blunting a gain for the FTSE 100 benchmark, following an unfavorable court ruling against the company over a 2010 oil spill in the Gulf of Mexico.

BP (BP) dropped 5.9%, the sharpest fall since June 2010, according to FactSet data, after a federal judge in New Orleans found the British oil giant was grossly negligent and acted with willful misconduct in the Deepwater Horizon disaster. The decision means BP could pay as much as $4,300 for each barrel of oil that was spilled following the April 2010 rig explosion, meaning BP could pay civil penalties of up to $18 billion.

U.S. District Judge Carl Barbier, citing precedent, concluded that BP wasn't liable for punitive damages. The rig explosion killed 11 workers and set off the worst offshore oil spill in U.S. history.

BP's tumble weighed on the FTSE 100 , which had been higher after the Bank of England held its key interest rate unchanged, a move markets expected.

Markets: The FTSE 100 closed up 0.1% at 6,877.97. The pound (GBPUSD) fell against the U.S. dollar to $1.6366 compared with $1.6448 ahead of the central bank's decision.

Standard Life held to the top advancing spot on the FTSE 100. Shares of Scotland's largest insurer rallied 8.1% on the company's plan to return 1.75 billion pounds ($2.88 billion) to investors. The move stemmed from plans by the insurer to sell its Canadian assets to Manulife Financial .

Bank of England: The Bank of England held the size of its 375 billion pounds ($617 billion) bond-buying program steady, and left its key lending rate at a record low of 0.5%, meeting market expectations. Policy makers were expected to keep the rate unchanged as wage growth in the U.K. remains weak and overall growth shows signs of slowing. Minutes from the September meeting will be released Sept. 17.

In August, two rate-board members voted for a rate increase, marking the first time since 2011 that any member voted in favor of raising rates.

Comment: The Monetary Policy Committee has been "unwavering in its assessment that any increase in interest rates is only likely to be gradual, but a number of question marks surround the timing of the first move," said Philip Shaw, chief economist at Investec Securities, in a note.

Incoming data and the impact of economic problems in the eurozone on the U.K. economy are among the factors the central bank will consider in making its rate decision. Although the timing of a BOE rate hike remains "very uncertain, we are for now staying with a November hike," said Shaw.

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