* First tar balls from spill wash up on Texas coast
* BP shares up 3.5 percent in London
* BP advisers look to sell 5-10 pct stake-Sunday Times
* Top 10 shareholder says "no thank you" to big investor (Adds oil found in Lake Pontchartrain)
By Raji Menon and Matthew Bigg
LONDON/NEW ORLEANS, July 5 Shareholders in BP <BP.L BP.N> balked on Monday at reports the energy giant would seek a strategic investor to ward off takeover bids while the company's massive oil spill in the Gulf of Mexico spread.
On the disaster's 77th day, BP spokesman Mark Proegler confirmed that government tests showed tar balls that washed up on the Texas coast near Galveston were from the spill, but only about five gallons were found.
Texas joins Louisiana, Mississippi, Alabama and Florida among the states whose coastlines have been soiled by the largest offshore oil spill in U.S. history.
The U.S. Coast Guard also reported an oily sheen and tar balls in the inland estuary of Lake Pontchartrain, which surrounds much of the city of New Orleans and its suburbs. The oil is being tested to determine if its origin is the Deepwater Horizon well, which ruptured on April 20, the government said.
Over the weekend, while U.S. Independence Day vacationers largely avoided beaches tarred by the leaking well, media reports said BP was looking for a strategic investor among the sovereign wealth funds (SWF) of the Middle East and Asia.
Such an investor could help ward off a takeover and raise funds for liabilities created by the spill. But some shareholders balked at the idea. [ID:nLDE6640Y7]
"We don't think a strategic partner is at all necessary," said one top-10 BP shareholder who did not want to be named.
"We think this is just people trying to panic the company and stampede (them) into doing something to earn huge fees from selling new shares. ... Shareholders will be saying 'No, thank you' to this and we have communicated this to the company."
Another top-10 investor agreed BP "probably did not" need a strategic investor at the moment.
BP shares closed up 3.5 percent in London but off earlier intraday peaks on the reports. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ For full spill coverage link.reuters.com/hed87k Special Report: Oil spill gushes for lawyers[ID:nN29258627] Special Report: Should BP nuke well? [ID:nLDE6610K6] Breakingviews [ID:nLDE6640I8] Insider TV link.reuters.com/ned73m Graphics r.reuters.com/qam39k ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
Britain's Sunday Times said BP's advisers were trying to drum up interest among rival oil groups and sovereign wealth funds to take a stake of between 5 and 10 percent in the company at a cost of up to 6 billion pounds ($9.1 billion). BP declined to comment. [ID:nLDE66307N]
A London banker said any SWF involvement might more likely involve the Far East than the Middle East.
Separately, several newspapers reported interest among SWFs in buying some of BP's assets in the Middle East and Asia. BP has said it hopes to raise $10 billion from asset sales this year as part of its plan to fund a $20 billion clean-up fund set up under pressure from U.S. authorities.
Arabic language daily al-Jarida was most specific, saying state-run Kuwait Foreign Petroleum Exploration Co (KUFPEC) is reviewing investing in oil fields in Egypt, Yemen and east Asia [ID:nLDE6640A8].
BP shares have lost more than half their market value since the spill was unleashed on April 20, the result of an explosion on a drilling rig that caused the undersea well to rupture.
Attempts to stop the flow have not worked, with BP pinning hopes on a relief well that should be completed in August.
The disaster is playing havoc with fragile coastal ecosystems, fishing communities and a tourist industry seen as especially important during a time of high unemployment.
A WHALE OF A TANKER
Some oil gushing out a mile undersea is being captured through a pipe, while some is being burned off.
Tests on a supertanker adapted to skim large quantities of oily water from the surface were inconclusive because of high seas, ship owner TMT Shipping Offshore said. [ID:nN05191855]
Dubbed "A Whale," it is seen as a potential savior of efforts to clean up the oil because it can collect 500,000 barrels (21 million gallons) per day of contaminated water.
Skimmer vessels have been out in force -- a fleet of 89 returned through the Biloxi Bay channel on Sunday -- but high seas were preventing many from operating. Eight fresh skimming vessels, leased from the French government by the state of Mississippi, have arrived in the state.
BP said on Monday it had so far spent $3.12 billion on the response effort, including $147 million paid out in claims to those affected by the disaster.
A storm in the Gulf packing heavy winds is likely to strengthen into a tropical cyclone before it tears into coastal Louisiana on Monday evening, complicating storm clean-up efforts, the National Hurricane Center said. (Additional reporting by Tom Brown in Miami and Eman Goma in Kuwait and Anna Driver in Houston; writing by Ed Stoddard and Andrew Callus; editing by Todd Eastham)