The latest plan to capture oil belching from a BP well into the Gulf of Mexico will work less well than originally hoped, the US Coast Guard said on Thursday.

Shares in the energy giant rose in London trading on market hopes that the plan to use robot submarines to cut a riser pipe on the sea floor would succeed in capturing at least a good part of the gushing oil already causing an ecological and economic disaster for US Gulf states.

At 1254 GMT, they were up 3.7 per cent in part because the the company scheduled a conference call with financial analysts on Friday.

Two US senators said on Wednesday BP should suspend plans to pay shareholder dividends until the full clean-up costs of the massive leak are known.

Problems with cutting through the ruptured pipe forced BP to modify the latest in a series of plans to seal or contain oil from the leak, said Coast Guard Admiral Thad Allen.

BP first tried to use a diamond-tipped cutter to cleanly slice the top of the pipe creating a smooth surface over which they would place a containment dome to collect the oil. But the diamond cutter got jammed in the metal so the company has now turned to giant shears which will create a less clean cut.

"With the new shears cutting device they will try to use today, they will need to put the top hat containment dome on top of the pipe to contain the oil flowing out of it," Allen said in an interview with CNN.

The top hat will not necessarily seal in the oil as effectively as the containment device they had planned to use with the diamond cutter. BP will also spread dispersants to counter any oil escaping from the top hat dome, Allen said.

The real solution to stopping the leak, which has wiped a third off BP's share value since it began in April, is by drilling a relief well, which won't be completed until August.

"That said, there's no reason why we can't contain this oil in the meantime and we're using all means available to do that," Allen said. "We're being relentless with British Petroleum to make this happen because we shouldn't tolerate oil being discharged clear until August."

The oil spill is causing an ecological and economic disaster along the US Gulf Coast and has also hurt President Barack Obama, accused of being too slow to respond.

BP could face billions of dollars in fines and penalties if a Justice Department investigation finds wrongdoing, in addition to billions from the economic liability and damages, according to legal experts.

It may also find it more difficult to meet targets for expanded production in the future, analysts said.

"People seem to be latching onto some sort of optimism the current operations are going to be successful. Really, it's still very early," said Arbuthnot Securities analyst Dougie Youngson. "This procedure is fundamentally very risky and it's not over yet."

Apology

While the plan inched ahead, CEO Tony Hayward retreated from yet another public relations gaffe -- apologizing for his widely reported remark, "I want my life back."

Thousands of fishermen, shrimpers and other seafood workers have been idled for weeks by government-imposed fishing restrictions that were expanded on Wednesday to cover 37 per cent of US federal waters in the Gulf.

In the struggle to minimize shoreline encroachment of oil, Louisiana Governor Bobby Jindal won White House approval on Wednesday for a controversial plan to essentially manufacture several new barrier islands off his state with sand dredged from the sea floor. Louisiana has been hardest hit so far by the oil slick.

The fragmented, far-flung oil slick posed a growing threat to several parts of Gulf Coast. Toxic goo from the spill crept to within 10 miles (16 km) of Florida's northwest panhandle, where officials said it could make landfall by Friday. – Reuters