BP shares jump as it stops oil flow

The stock dipped below 300p at one stage last month - its lowest point since August 1996 - but has recovered to around 425p amid signs that it is closer to tackling the crisis, which has so far cost more than 2.3bn in spillage and clean-up.

BP said last night that the leaking well had been sealed with a test cap that should stop crude oil spilling into the ocean for 48 hours.

However, the firm stressed that even if the test is successful it will not mean the flow of oil and gas has been stopped permanently.

BP executive Kent Wells said yesterday: "It is very good to see no oil go into the Gulf of Mexico."

President Barack Obama also called it a positive sign, but cautioned: "We're still in the testing phase."

The disaster began when the Deepwater Horizon rig exploded on April 20, killing 11 workers.

BP is vital to the UK not only as an employer but also a major taxpayer and contributor to pensions. Of every 7 paid into pensions from dividends 1 comes directly from BP, and last year it paid 5.8bn in taxes.

This year BP is not paying a dividend for the first time since the Second World War, although it insists it is financially strong enough to tackle the spill.

The group paid out about 110m in claims to 52,000 businesses so far, although the intense political pressure on the oil giant eased after the group set aside a 13.2bn compensation fund to meet the costs of the disaster in June.

A BP spokeswoman said: "Information gathered during the test will be reviewed with the relevant government agencies, including the federal science team, to determine next steps.

"The sealing cap system never before has been deployed at these depths or under these conditions, and its efficiency and ability to contain the oil and gas cannot be assured."