By Terry Wade

HOUSTON (Reuters) - BP Plc <BP.L> was "grossly negligent" for its role in the oil spill in the Gulf of Mexico four years ago, a U.S. district judge said on Thursday in a ruling that could add billions of dollars in fines to the more than $42 billion in charges taken so far for the worst offshore disaster in U.S. history.

Shares of BP traded in the United States fell 5 percent, or $2.40, to $45.31, eroding about $8.8 billion of its market value. BP shares traded in London closed down nearly 6 percent, the worst one day slide in more than four years.

U.S. District Judge Carl Barbier in New Orleans held a trial without a jury last year to determine who was responsible for the April 20, 2010 environmental disaster. Barbier ruled that BP was mostly at fault and that two other companies in the case, Transocean Ltd <RIG.N> and Halliburton <HAL.N>, were not as much to blame.

"The Court concludes that the discharge of oil 'was the result of gross negligence or willful misconduct' by BP, the ruling said.

BP said it would appeal the ruling. "The law is clear that proving gross negligence is a very high bar that was not met in this case," BP said in a statement. "BP believes that an impartial view of the record does not support the erroneous conclusion reached by the District Court."

The disaster struck the U.S. Gulf coast when a surge of methane gas known to rig hands as a "kick" sparked an explosion aboard the Deepwater Horizon rig as it was drilling the mile-deep Macondo 252 well off Louisiana. Eleven workers were killed and the rig sank two days later.

The well spewed oil into the Gulf of Mexico for nearly three months, fouling the shorelines of several states.

Barbier said BP should have been extra careful because deepwater drilling is inherently risky. The judge faulted BP employees for misreading the results of a test on the stability of the Macondo well, suggesting that its blowout could have been prevented.

"Today's ruling dramatically increases BP's liability for civil penalties under the Clean Water Act," said David Uhlmann, a legal expert at the University of Michigan.

BP has already been forced to shrink by selling assets to pay for the cleanup. Those sales erased about a fifth of its earning power.

Jason Gammel, an equity analyst at Jefferies in London wrote: "Even in the event of a maximum fine, we believe that BP has sufficient liquidity to meet its obligations. We further expect that a worst case scenario of fine level would not be paid in the near term; we would expect a lengthy appeals process first. We thus do not believe there is risk to the current BP dividend."

Barbier has yet to assign damages from the spill under the federal Clean Water Act. A gross negligence verdict carries a potential fine of $4,300 per barrel fine.

BP says some 3.26 million barrels leaked from the well and the U.S government says 4.9 million barrels spilled. The statutory limit on a simple "negligence" is $1,100 per barrel.

Previous calculations by Reuters have shown fines could run to $17.6 billion in the costliest scenario under a 'gross negligence' finding. The biggest fine under a simple 'negligence' ruling could run to just $4.5 billion.

The judge apportioned 67 percent of the fault to BP, 30 percent to Transocean, which owned the drillship, and 3 percent to Halliburton, which did cement work on the Macondo well.

Transocean and Halliburton have sought to limit their liability from the spill and their shares were slightly lower after the ruling.

Barbier is set to assign damages after a third phase of the civil trial over the accident, scheduled for January 2015. The two earlier phases of the trial looked at how to apportion blame among BP and its partners and the second phase examined how much oil spilled.

Even after the Clean Water Act fines are set, BP may face other bills from a lengthy Natural Resources Damage Assessment, which could require BP to carry out or fund environmental restoration work in the Gulf, and other claims.

The case is In re: Oil Spill by the Oil Rig "Deepwater Horizon" in the Gulf of Mexico, on April 20, 2010, U.S. District Court, Eastern District of Louisiana, No. 10-md-02179.

(Reporting by Sudip Kar-Gupta and Karolin Schaps, Mica Rosenberg in New York and Anna Driver in Houston; Writing by Terry Wade; Editing by Grant McCool)