FTSE down; BP hits 13-year low on spill concerns

* FTSE 100 down 0.5 pct; BP hit by div, litigation worries

* Banks slide; Europe concerns, OFT probe

* Home retail down on results

LONDON, June 10 (Reuters) - A tumble in BP BP.L shares pushed Britain's top share index into negative ground early on Thursday, as investors fretted over the oil giant's dividend and its financial exposure to the disaster in the Gulf of Mexico.

By 0825 GMT, the FTSE 100 .FTSE was down 14.92 points, or 0.3 percent, at 5,070.94, having broken a three-day losing streak on Wednesday, closing up 1.2 percent, after a choppy session which saw the index hit an intraday low of 4,998.06.

“There’s a good line of technical support at 4,976, but certainly anything around the 5,000 level is going to bring investors back in,” Stephen Pope at Cantor Fitzgerald said.

“BP is dragging the whole index at the moment but generally speaking we have some companies that are very good, so you should find investors looking around for some early summer bargain hunting.”

BP fell 6.2 percent, taking over 17 points off the index.

Investors’ main concerns surround the company’s ability to pay its dividend and the costs BP will have to assume to deal with liabilities related to the disaster.

The cost of the response effort to date has been around $1.43 billion, the company said.

BP has shed as much as 45 percent of its value since the oil began to spill on April 21, and hit its lowest level since April 1997.

President Barack Obama’s administration, getting tough as polls show public disapproval over its handling of the worst oil spill in U.S. history, has threatened new penalties on the company, further sapping investor confidence in the British oil giant.

The ongoing problems continued to dent sentiment towards the energy sector, with peers Royal Dutch Shell RDSa.L and BG Group BG.L down 0.8 and 0.6 percent respectively, while oil explorer Tullow Oil TLW.L shed 0.3 percent.


Britain's No.1 household goods retailer Home Retail Group HOME.L dropped 5 percent, the second biggest FTSE 100 faller, after it posted a bigger than expected drop in first-quarter sales.

The bad news from Home Retail hit other high street stocks, with blue chips Next NXT.L, Kingfisher KGF.L and Marks & Spencer MKS.L falling 0.5 to 1.0 percent, while mid cap Game Group GMG.L lost 5.0 percent.

Banks were also in retreat, pressured by lingering concerns on Europe’s massive debt pile and after Britain’s Office of Fair Trading said it would examine the equity underwriting market, which is dominated by a small number of investment banks, in light of companies’ concerns about competition in the market.

Barclays BARC.L, HSBC HSBA.L, Lloyds Banking Group LLOY.L, Royal Bank of Scotland RBS.L and Standard Chartered STAN.L were down 0.1 to 1.1 percent.

Attention later in the session will focus on interest rate decisions due from the Bank of England and the European Central Bank.

The latest Bank of England rate decision is due at midday, the first to be made after the formation of the new British coalition government, although no change is expected to be made to monetary policy. [ID:nLDE658172]

The European Central Bank will also announce its interest rate decision on Thursday, with the status quo expected to be maintained as well when an announcement is made at 1145 GMT. (Editing by Hans Peters)