BP Plc said on Tuesday that it could cover the costs of the Gulf of Mexico oil spill without selling new shares, despite reports it was talking to government-owned funds in the Middle East about buying a stake to ward off takeover attempts.

The speculation boosted the oil company's shares even as oil from the slick spread to the coast of Texas, which had been the last U.S. Gulf state whose shores were untainted by the environmental disaster.

The spill is wreaking havoc on coastal ecosystems, fishing communities and a tourist industry seen as especially important during a time of high unemployment. Vacationers largely avoided beaches tarred by the leaking well during the three-day U.S. July 4 Independence Day holiday weekend.

U.S.-listed shares of BP soared nearly 7 percent on Tuesday after gains in London that were also supported by a brokerage upgrade.

The market moves came on the 78th day after an explosion on the Deepwater Horizon drilling rig killed 11 people and burst an oil well scientists say gushes up to 60,000 barrels a day. At one stage after that disaster BP had lost $100 billion in market value.

Investors said barring other negative news, the stock may have found a floor with its recent closing price at $26.97 on June 25. Shares are up 16 percent since the close on that day.

It feels like all the negative news on the stock has had its impact, said Kurt Wulff, president at McDep LLC, an oil and gas research firm in Needham, Massachusetts.

We're optimistic that the news can get better from there. The talk about sovereign buyers may not lead to anything, but it certainly means that value-orientated investors are seeing opportunity.

TALKS WITH SOVEREIGN FUNDS

On Tuesday, a source in the United Arab Emirates said BP executives held talks with sovereign wealth funds in Abu Dhabi, Kuwait and Qatar, as well as one in Singapore, to find a partner who might help it avoid being taken over by another major oil company.

BP is seeking a strategic partner so it doesn't get taken over by other major oil companies such as Exxon and Total, the source said.

BP declined to comment on talk of a stake sale. It did say there were no plans to issue new equity to anyone, allaying some investors' fears of a share issue to help pay for a spill expected to cost tens of billions of dollars. The company's bill for the spill has already passed $3 billion.

We're always happy to welcome new shareholders or existing shareholders who wish to increase their holdings but there's no plans to issue new equity to anyone, a BP spokesman said.

A top 10 shareholder said any move to issue shares would be viewed extremely negatively.

It will be a kind of suicide note -- people will turn up with flame throwers at management There is a chance that they will issue a bond ... But the equity stuff is delusional, the shareholder said.

GOOD INVESTMENT?

Several sovereign funds already hold BP stakes. Norway and Kuwait control about 1.8 percent each, China has 1.1 percent and Singapore 0.7 percent, according to Thomson Reuters data.

Royal Bank of Scotland upgraded BP to buy from hold.

Our base case scenario is significantly less pessimistic and in our view, the risk/reward profile of the shares is currently favorable, it said in a note.

Just two out of 37 brokers have an underperform or sell rating on BP's stock, and over two-thirds rate it buy or strong buy, according to Thomson Reuters data.

The stock's 12-month forward price-to-earnings ratio makes it easily the cheapest among the major oil companies.

Britain's The Times newspaper reported the British government was drafting contingency plans for a possible BP collapse. The British government declined to comment.

U.S. government tests showed tar balls that washed up on the Texas coast were from the spill, meaning every U.S. Gulf state -- Louisiana, Mississippi, Alabama, Florida and now Texas -- has been soiled by the largest offshore oil spill in U.S. history.

The U.S. Coast Guard also reported an oily sheen and tar balls in the inland estuary of Lake Pontchartrain, which surrounds much of the city of New Orleans and its Louisiana suburbs.

On the site of the spill itself, attempts to stop the flow have not worked. BP has pinned hopes on a relief well that should be completed in August.

There was a chance disturbed weather over the southern Gulf of Mexico could strengthen into a tropical storm this week, the U.S. National Hurricane Center said.

Although it was not expected to travel over the site of the blown-out BP well, it could come closer than Tropical Storm Alex, which interrupted the cleanup operations last week.

Coast Guard spokesman Commander Charles Diorio said on Tuesday rough seas and high winds continued to hamper oil skimming operations.

Offshore skimming crews were unable to collected any oil-fouled water on Monday off the coasts of Alabama, Mississippi and the Florida Panhandle, Diorio said on a conference call from a regional command center in Mobile, Alabama, responsible for the area.

At the same time, he said near-shore and inland skimming crews had collected a grand total of three barrels of oily water.

At the site, some oil gushing out a mile undersea is being captured through a pipe, while some is being burned off.

Tests on a supertanker adapted to skim large quantities of oily water from the surface were inconclusive because of high seas, ship owner TMT Shipping Offshore said.

(Additional reporting by Raji Menon, Joel Dimmock, Tessa Walsh, David Brett and Sarah Young in London, Amena Bakr and Nicolas Parasie in Dubai, Tom Brown in Miami, Anna Driver in Houston and Ryan Vlastelica in New York; writing by Patricia Zengerle; editing by Jerry Norton)

United arab emirates Oil Spill