By Donna Kardos Yesalavich Of DOW JONES NEWSWIRES NEW YORK (Dow Jones)--Shares of BP PLC (BP) rose sharply Tuesday after the oil giant put to rest speculation that it was planning to issue new shares to better deal with escalating costs from the Gulf of Mexico oil spill. American depositary shares of BP jumped 6.6% recently to $31.30, marking the first time trading above $31 in two weeks. The stock has climbed nearly 18% from the 14-year low hit last week, although it is still down 48% from its close April 20, the day the Deepwater Horizon rig exploded. In London, BP's shares closed 3.7% higher. In BP options, the trading was similarly bullish, with more volume in calls, which convey the right to buy, than in puts, which convey the right to sell. The cost to insure against BP defaulting on its debt for five years fell to $440,000 for $10 million of coverage from $572,000 at Friday's close, according to Markit, a data provider. A BP spokeswoman said the company would welcome if any existing shareholders or new investors want to expand their holding in the company by buying already-listed shares, but no new shares will be listed. The statement came after a number of press reports over the weekend said BP was courting sovereign wealth funds in the Middle East, raising expectations that a white-knight investor might buy new shares to boost the oil giant's capital. Concerns about potential equity dilution had been mounting in recent weeks, especially after Nomura told clients in a research note late last month that a sale of shares, perhaps backed by sovereign wealth, "could prove the attractive short-term solution" to investors' weakening confidence in BP's financial state. BP's statement served a key role in dispelling the dilution worries. Investors were further encouraged after Royal Bank of Scotland boosted its investment rating on BP's shares to buy from hold, saying "we doubt that total direct and indirect costs of the spill to BP will be as large as currently discounted in its share price." RBS set a new price target that implies it expects the stock to climb 41%. Also providing some reassurance, BP said that it captured about 24,980 barrels of crude from the Deepwater Horizon spill Monday, indicating that oil-recovery efforts at the site of the spill have stabilized after high seas hindered the efforts late last week. In total, BP has collected about 657,300 barrels of oil at the site. Nevertheless, some investors are still afraid of going near BP's shares, thanks to the continued uncertainty over the spill and the oil giant's ultimate liabilities for it. Among them is Bruce McCain, chief investment strategist at Key Private Bank. "The things that we think have been depressing the price, particularly the unknown rate of flow, how much oil has been spilled, and how much their liability might be...nothing in the news has really resolved that," McCain said. He added, "The only thing you're getting is maybe an indication that maybe it's not quite as bad as the market anticipated, but we don't see anything that looks like it's lifting the fundamental prospects." -By Donna Kardos Yesalavich, Dow Jones Newswires; 212-416-2188; donna.yesalavich@dowjones.com (James Herron contributed to this article.) (END) Dow Jones Newswires July 06, 2010 12:37 ET (16:37 GMT)