The stock had dropped as much as 11 percent to a 13-year low at the open as experts warned dividend payouts would likely be postponed. However, it recovered some ground by midmorning, trading 4.5 percent lower at 373.80 pence ($5.46) as analysts suggested the sell-off was overdone.
"Before the spill happened, this stock, BP, was trading at more than $60 a share," said CBS News business and economics correspondent Rebecca Jarvis. "That was back before April 20. Now it is below $30 a share. That free fall has halved the company's stock. And just to put the value into perspective, the company's stock itself has lost $90 billion for shareholders."
As BP finds itself caught between an angry U.S. administration and unhappy shareholders, Prime Minister David Cameron's office said the British leader would discuss the issue with President Barack Obama on a scheduled telephone call over the weekend.
Investors are fretting about the rising costs facing BP after Obama suggested it should pay unemployment benefits to thousands of oil workers laid off during a moratorium on deep-sea drilling triggered by the spill.
BP tried to reassure investors before the London Stock Exchange opened, saying it was in a strong financial position and it saw no reason to justify the U.S. sell-off, and many analysts agree that the company can withstand the crisis.
In a statement released early Thursday morning, BP said it isn't aware of any justification for the sharp sell-off in its shares in U.S. trading. The company underlined what it said was a strong financial position in the statement, released just before the London Stock Exchange opened, claiming "significant capacity and flexibility" to deal with the cost of responding to the spill. But the remarks failed to prevent the similar early sell-off in London.
But most market experts also acknowledge that the political rhetoric surrounding the accident was outweighing financial fundamentals.
"We don't believe BP has a funding issue but given the overwhelmingly hostile nature of the U.S. government the company may decide to suspend payments until the wells are capped and the clean-up sufficiently advanced to convince the US that it can afford all the costs as well as pay dividends," said Evolution Securities analyst Richard Griffith. "Unilateral action against BP over its U.S. operations, be it unreasonable or illegal, hangs over BP."
BP earned about $17 billion last year and has about $12 billion in cash on its books, Jarvis noted, while the company estimates it will spend no more than $23 billion paying for the cleanup.
"So they can pay, BP can pay those costs right now," Jarvis said. "Unknown in costs is the lawsuits that they will face for many, many years out. And that's where people get nervous."
Robert Talbut, the chief investment officer at Royal London Asset Management, a shareholder in BP, said that "there is a lot of very irrational and short-term selling going on." But he added that talk of a potential sale of assets or takeover bid - PetroChina Ltd. has been suggested by some analysts as a potential suitor - was not surprising.
"I can understand exactly why someone else would want to buy the BP assets because I think they are grossly undervalued at the moment," he said. "As a shareholder, it's not something I would welcome."
The politics of the spill crossed the Atlantic on Thursday, with London Mayor Boris Johnson expressing concern about the "anti-British rhetoric that seems to be permeating from America."
Johnson said that BP was paying a "very, very heavy price" for an accident.
"I would like to see a bit of cool heads rather than endlessly buck-passing and name-calling," Johnson told BBC Radio. "When you consider the huge exposure of British pension funds to BP it starts to become a matter of national concern if a great British company is being continually beaten up on the airwaves."
Cutting the dividend would have a big impact in Britain, where the company accounts for about an eighth of dividend payments from companies in that country's blue-chip stock index, providing crucial income for retirees. In addition, about 40 percent of BP's shareholders are based in the U.S.
BP, which earned more than $16 billion last year, said Thursday that the cost of the clean-up and containment efforts had now hit $1.43 billion.
Speaking to investors last week, CEO Tony Hayward wouldn't estimate the total bill, though he told analysts that minority partners in the rig would be expected to pay as well.
BP stressed on Thurday that it had "significant capacity and flexibility" to deal with ongoing costs, underlining its additional cash flow, strong debt to equity ratio and proven reserves.
The company reminded investors that it had indicated in March - before the explosion at the Deepwater Horizon rig - that its cash inflows and outflows were balanced at an oil price of around $60 per barrel.
It said its gearing was currently below the bottom of its targeted range and its asset base was "strong and valuable." The company had more than 18 million barrels of proven reserves and 63 billion barrels of resources at the end of 2009.
The share price falls in London and New York have wiped out around half the company's market value.
Killik & Co. analyst Jonathan Jackson said the shares would remain very volatile until there was a clearer idea of the potential cost but he remained positive on the stock.
"Despite the high risk involved in adding to holdings in the short term and the possibility of a temporary suspension of the dividend, we would continue to do so," he said.
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