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Friday, 23 November, 2001, 17:41 GMT
Falling oil price hurts stocks
London Stock Exchange traders
London stock exchange: FTSE 100 2% lower
Russia's decision to reject pleas for a large cut in oil production, to support crude prices, has pushed European stock markets into the red.

News that Russia plans to reduce its output by just one tenth of the amount recommended by producers' cartel Opec triggered a sell-off in oil stocks, and dragged share indices across Europe lower in turn.

Brokers said thin trading volumes had were exaggerating price movements.

But a strong opening by US shares helped stocks in London to recover from earlier lows.

Winners and losers

The FTSE 100 index of leading shares, which stood 125 points down in lunchtime trade, closed down 52.7 points, with oil firms among losers.

Conversely, the prospect of cheaper oil pushed airline shares higher, with British Airways stock closing 2.6% up.

Shares in bank giant Barclays also lost ground after a leading US analyst downgraded its stock, arguing that the bank was too exposed to the underperforming eurozone economy.

In France, the Cac 40 index of leading shares rebounded 40 points to end 1.4% lower, despite news that France's economy grew much faster than expected between July and September.

Output cuts

The cartel of oil producers, Opec, has pledged to cut its output by 1.5 million barrels a day - but only if non-Opec members support this attempt to shore up weak oil prices with similar measures.

Opec had hope that Russia would cut its production by 500,000 barrels.

Russia's announcement on Friday that it plans to reduce its output by just 50,000 barrels a day makes it less likely that the world oil price will recover from its current lows.

The price of crude oil, which has been rising steadily in anticipation of a Russian output cut, fell below $19 a barrel on Friday afternoon.

See also:

23 Nov 01 | Business
Oil price falls on Russian snub
23 Nov 01 | Business
Norway output cut boosts oil price
20 Nov 01 | Business
Hopes for Russia deal with Opec
18 Nov 01 | Business
Russia may agree more oil cuts
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