Here are developments in the Gulf of Mexico oil spill, the largest in U.S. history:

SPILL CONTAINMENT EFFORTS

* After BP Plc said the complex top kill maneuver to plug its Gulf of Mexico oil well had failed, it hit a snag on Wednesday in an effort to saw through a riser pipe in an operation to funnel oil to the surface.

* BP's undersea robots succeeded in making a sheer cut to the riser pipe, but the robot's sawblade became stuck inside the pipe while attempting to make a second cut, Coast Guard Admiral Thad Allen told reporters. BP will proceed with a plan to place a cap or funnel over the leaking pipe once cutting operations are finished, Allen said.

* Government scientists estimated that cutting the riser pipe coming out of the blowout preventer to prepare for the next containment option could result in a temporary oil flow increase of up to 20 percent.

* The ultimate solution may be the drilling of two relief wells began in May and to be completed in August, an expensive but more reliable way to intercept and cap the leaking well.

OIL SLICK THREAT

* Tar balls and other oil debris from the giant, fragmented slick reached Alabama's Dauphin Island, parts of Mississippi, and were less than 10 miles from Florida's northwest Panhandle coast. NOAA has predicted oil could further affect coastline in Alabama and Mississippi in coming days.

* The NOAA forecast was a sober reminder that oil from the unchecked spill, broken up and carried by winds and ocean currents, could threaten a vast area of the U.S. Gulf Coast, including Florida, as well as Cuba and Mexico.

POLITICS

* President Barack Obama met on Tuesday with the co-chairs of a commission he set up to investigate the spill, former Senator Bob Graham and former Environmental Protection Agency chief William Reilly. Obama vowed to overhaul U.S. laws and regulations governing offshore drilling to prevent a repeat of the catastrophe.

* Attorney General Eric Holder said the Justice Department has launched a criminal and civil investigation into the spill and rig explosion that killed 11 workers. The FBI is taking part.

* Democratic lawmakers stepped up their calls for action. Representative Ed Markey called the spill an environmental crime and Senator Mary Landrieu demanded BP invest $1 billion in wetlands protection.

* On Sunday, the president ordered that government and contractor clean-up resources in areas affected by oil be tripled.

COMPANY NEWS

* BP Managing Director Robert Dudley said that he does not think BP Chief Executive Tony Hayward, who has faced heavy criticism, should resign.

* BP's total financial cost of the response to the disaster stands at $990 million, and is rising.

MARKETS

* BP lost 2.4 percent in morning trading in Europe on Wednesday, extending its 13.1 percent drop in the previous session. The shares later pared early losses. The company has lost more than a third of its market value, or about $67 billion (46 billion pounds), since the crisis began.

QUOTE OF THE DAY

We had our first contact in the state of Mississippi in Mississippi Sound and some islands to the west, Coast Guard Admiral Thad Allen said. Louisiana has been impacted and now the threat is shifting to Mississippi and Alabama.

(Writing by Mary Milliken; editing by Vicki Allen)

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