A flotilla of nearly 200 boats tackled a massive oil slick in the Gulf of Mexico on Tuesday, taking advantage of calmer weather to intensify the fight to reduce the spill and limit its impact on the U.S. shoreline.

Energy giant BP Plc, under heavy pressure in Washington, struggled to plug a gushing undersea leak that threatened to wreak havoc on Gulf Coast fishing and tourism and reshape the U.S. political debate on offshore drilling.

Calmer seas after days of high winds aided one of the biggest oil containment operations ever attempted.

Boats were laying down and repairing miles of boom lines strung along Gulf shores to try to fend off and contain a drifting slick estimated to be at least 130 miles by 70 miles in size.

Weather forecaster Accuweather.com said favorable winds and waves could keep the slick from reaching the Gulf coastline for a few more days or longer.

With the conditions turning better and better, it's encouraging, Coast Guard Petty Officer Matthew Schofield said from the Joint Information Center in Roberts, Louisiana.

It's a moving target ... There are a lot of factors in how it moves and disperses, he said of the slick. There have been no reports of thick oil on shore.

BP shares showed signs of bottoming out on Tuesday after an almost two-week slide. BP's London-listed shares, which did not trade on Monday due to a public holiday, were down 3 percent at 555 pence, in line with a 3.2 percent fall in the STOXX Europe 600 Oil and Gas index. In New York, BP American Deposit Receipts traded up 1.2 percent after falling on Monday.

The stock has fallen about 17 percent in the two weeks since the company announced an explosion and fire on the Deepwater Horizon drilling rig, which subsequently sank, unleashing a massive oil flow into the sea.

Oil prices briefly rallied on Monday on concerns the spill could disrupt U.S. imports or Gulf Coast refineries, although major facilities reported no impact on operations. On Tuesday prices dived more than 3 percent as traders refocused on a rallying dollar and growing euro sovereign risk concerns.

The looming disaster threatens to eclipse the 1989 Exxon Valdez catastrophe in Alaska, the worst previous U.S. oil spill to date.

'DISASTER FOR YEARS AND YEARS'

Our biggest concern is that the oil comes in any kind of volume and settles in the cane. Once it settles it destroys the cane and kills the shrimp, charter boat captain Dan Dix said in Venice, Louisiana.

If you kill the shrimp, you kill the fish that feed off the shrimp, and if you kill the fish then there is nothing left in the Gulf of Mexico. That would absolutely be a disaster for years and years, he said.

U.S. Defense Secretary Robert approved requests from three more governors of Gulf Coast states to fund the deployment of thousands of National Guard troops to respond to the oil slick, the Pentagon said.

In addition to backing Louisiana's request for up to 6,000 Guard members, Gates also approved requests from Mississippi for 6,000 Guard members, Alabama for 3,000 and Florida for 2,500.

We are committed to preventing as much of the economic damage as possible by working to contain the impact of this potentially devastating spill, President Barack Obama said.

BP, a London-based energy giant, said it was rushing efforts to plug the leak but could not offer concrete assurance of immediate results.

It has completed the first of three massive steel and concrete domes it will try to place this week over one of three leaks nearly a mile under the water's surface. The 98-tonne, 40-foot iron box is designed to channel oil through a pipe to the surface where it can be collected on a barge.

But BP has never deployed the structure at a depth of 5,000 feet and cannot guarantee the effort will pay off.

The accident highlighted the difficult politics of balancing U.S. energy security and worries about protecting the environment and industries that depend on it, like fishing.

It forced Obama to suspend plans to expand offshore oil drilling, unveiled last month partly to woo Republican support for climate legislation.

Florida Democratic Senator Bill Nelson, a fierce opponent of offshore drilling because of the environmental risks it entails, said the expanded drilling proposals were dead on arrival in Congress.

California Governor Arnold Schwarzenegger pulled his support for expanded drilling off his state's coast, citing the Gulf spill. His reversal came after he had called for more oil drilling off California to raise money to help cover a $20 billion state budget shortfall.

GRANTS FOR THREATENED STATES

The Mississippi River delta and other areas of the U.S. Gulf Coast are threatened by contact from the leak, spewing from the ocean floor at a rate estimated at more than 5,000 barrels a day.

BP said it is releasing $25 million each in block grants to Louisiana, Mississippi, Alabama and Florida to jump-start clean-up projects. The funding can be used for numerous expenses such as vessels for hire.

BP has spent several years working to burnish its environmental image. It now faces a public relations nightmare as well as intense pressure from the Obama administration to get the situation under control.

Over the weekend it started a relief well that could stop the leak, the company said. Still, this operation is expected to take two to three months to complete.

(Additional reporting by Kelli Dugan in Mobile, Alabama; Chris Baltimore, Anna Driver and Kristen Hays in Houston; Matt Daily and Tom Bergin in London; Pascal Fletcher in Miami, Jeremy Pelofsky in Washington; Writing by John Whitesides; Editing by Eric Beech)

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