BP has faced a number of setbacks recently

Replacement cost profit for the April to June period was down 1% on last year to $6.09bn (�3bn).

The results are the first set since Lord Browne stepped down as the firm's chief executive in May after a scandal involving his personal life.

BP has suffered a number of setbacks recently, including a fatal fire at a Texas refinery, and oilfield shutdowns.

But analysts suggested that the figures were an improvement on the first quarter of the year, when BP posted a 17% decline in earnings, as lower oil and gas prices on the world market at the start of the year took its toll

Overall, for the first half of the year, profits at the London-based firm fell 8% at $10.45bn.

The challenges may not be over but at least the rot seems to have been stopped Richard Hunter Hargreaves Lansdown

The improved second-quarter number has encouraged investors who are looking to the firm's new chief executive Tony Hayward to revive the UK oil giant's flagging fortunes.

"The challenges may not be over but at least the rot seems to have been stopped," said Richard Hunter, head of UK equities at stockbrokers Hargreaves Lansdown.

Further afield

With oil fields in the North Sea drying up, BP will have to look further afield for production growth.

BP said production had dropped by 5% to 3.8 million barrels of oil equivalent per day in the second quarter, compared to 4 million in the same period last year.

But plans to tap into Russia's precious oil and gas reserves - it had a majority stake in joint venture TNK-BP, which owns the giant Kovykta field- recently went awry.

It was forced to sell its stake to Russian gas monopoly Gazprom following pressure from the Kremlin, which has been accused of protectionism.