'Financial Times': Oil Stocks Only Slightly Lower on Falling Prices; European Markets Rally
DEBORAH MARCHINI, CNN ANCHOR: Well, we've got the price of oil sliding in European trading this morning, but the market for stocks are not doing so. Nicholas Leonard, of the "Financial Times," joins me know from the "FT"'s London newsroom. And Nic, how much of a toll is the price of oil taking on oil stocks?</s>NICHOLAS LEONARD, "FINANCIAL TIMES": The oil stocks are lower, but they are not really falling as substantially as the oil price looks like doing, because a good deal of the likely decline in the oil price is already factored into their capitalizations. What we have is that the Brent from November delivery has fallen below the psychologically-important $30 a barrel level, down 20 -- down 75 cents, and that reflects the release of reserves in the United States and in Japan.</s>MARCHINI: All right, the markets also appear at first blush to have shrugged off an important earnings warnings from personal computer maker Dell. Is that the case?</s>LEONARD: Very much so, yes. The markets are taking their cue from the rally of nearly two percent in the Nasdaq overnight. They're not really focusing on the Dell profit warning, they're looking at the more positive aspects: Vodafone is up again on the hopes for its Hong Kong and Chinese expansion taking a stake in China Mobile; we have Marconi, the telecom manufacturer, up nearly 5 percent on a major outsourcing deal, around 2900 employees in the U.S. and in Europe will be moved to other employers in order to cut costs and operate more efficiently.</s>MARCHINI: We also have word this morning that a merger between EMI and Warner Music is been called off.</s>LEONARD: EMI and Time Warner have found so many problems, Deborah, trying to get a way of obtaining approval from the European Commission to merge at the time when AOL is merging with Time Warner itself. They offered numerous concessions in informal discussions. Today they have given up the effort. And what they've said is they're abandoning the current merger proposal. They are going to continue to talk about other possibilities. And if there is another deal, they will come back to their shareholders for separate approval. EMI shares fell more than 2 percent on the news, but they have rallied on the view that, in its own right, EMI may now be a more valuable company because the concessions that were being talked about could have undermined the rationale of the original merger proposal in the first place.</s>MARCHINI: And I understand there are some developments in the tobacco business this morning.</s>LEONARD: European Court of Justice has annulled the decision by the European Union to ban all tobacco advertising from the year 2006. I think this is a temporary setback. The opponents of tobacco advertising are going to move forward again, but it's being greeted with modest relief in the London stock market, British American Tobacco has gone up a few pennies, and also Imperial Tobacco.</s>MARCHINI: All right, I want to thank you very much, Nicholas Leonard from the "FT."