BP Cuts Dividends

Investors were surprised to learn of the scale of BP’s cutbacks this week, after the oil company’s meeting with US President Barack Obama.

The company has decided to launch a $20 billion fund which it will add to gradually over time, to pay for its part in the Gulf of Mexico oil spill.  To set up the fund, it has made cutbacks including dividend cuts.  Dividends will not be paid for the next three quarters, a move which has surprised share holders.  In addition, the company will introduce asset sell-ofs and it will scale down its investment programmes.

The news led BP shares to rise in early trade on the London session this morning.  By 8AM they had risen by 7 per cent.

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