(Video APTN)

BP's stock plummeted and took much of the market down with it on Tuesday, as the US federal government announced criminal and civil investigations into the Gulf of Mexico oil spill.

BP engineers, meanwhile, were mounting a renewed effort to stop the gusher, with a method which will initially make the leak worse.

Attorney General Eric Holder, who was visiting the Gulf to survey the fragile coastline and meet with state and federal prosecutors, would not say who might be targeted in the investigations into the largest oil spill in US history.

"If we find evidence of illegal behavior, we will be extremely forceful in our response," Holder said in New Orleans.

BP's stock nose-dived on Tuesday, losing nearly 15 percent of its value on the first trading day since the previous best option, the so-called "top kill", failed and was aborted at the government's direction.

It dipped steeply with Holder's late-afternoon announcement, which also sent other energy stocks tumbling, ultimately causing the Dow Jones industrial average to tumble 112 points.

A NASA satellite image taken on April 21, 2010, shows the Gulf of Mexico one day after the Deepwater Horizon oil rig explosion. The oil platform appears as a white dot, and a fan of brown smoke extends to the southeast. [Photo: CFP]

After six weeks of failures to block the well or divert the oil, BP had on Tuesday mounted its latest attempt, using robotic machines to carve into the twisted appendages of the crippled well.

The latest attempt involved using tools resembling an oversized meat slicer and garden shears to break away the broken riser pipe so engineers can then position a cap over the well's opening.

Even if it succeeds, it will temporarily increase the flow of an already massive leak by 20 percent, at least 100-thousand gallons (380-thousand litres) more a day.

And it is far from certain that BP will be able to cap a well that one expert compared to an out-of-control fire hydrant.

The operation has never been performed in such deep water, and is similar to an earlier failed attempt that used a larger cap that quickly froze up. BP PLC officials said they were applying lessons learned from the earlier effort.

Since the Deepwater Horizon rig exploded on April 20, killing 11 workers and eventually collapsing into the Gulf of Mexico, an estimated 20 million to 40 million gallons (75 million to 150 million litres) of oil has spewed, eclipsing the 11 million gallons (41.6 million litres) that leaked from the Exxon Valdez.

Oil has fouled many fishing areas and miles of ecologically sensitive coastline.

Mississippi Governor Haley Barbour said oil from the spill was found in his state for the first time, on a barrier island, and newly expanded federal restrictions mean that nearly a third of federal waters are closed to fishing.

Meanwhile, an oil sheen was confirmed about nine miles (14.5 kilometres) off the Florida coast, and officials said it could hit the white sands of Pensacola Beach as soon as Wednesday.