FRANKFURT (AFX) - Deutsche Telekom AG is still interested in buying O2 PLC after saying yesterday talks had collapsed, Handelsblatt newspaper said, citing sources close to the company.
Royal KPN NV and Deutsche Telekom said they have ended talks regarding a possible purchase of O2 and currently have no plans to bid for any part of the UK operator.
But if Deutsche Telekom pursues a purchase of O2 on its own, it will have to find a buyer for O2's German operations to satisfy regulatory demands.
The newspaper said possible buyers for the German operations are France Telecom SA and Telefonica SA.
And while UK law commonly forbids resuming talks with a takeover target within six months of previous talks collapsing, there are exceptions that may apply if, for instance, one of Deutsche Telekom's competitors bids for O2, Handelsblatt said.

LONDON (AFX) - Leading shares are expected to start the day lower, mirroring sharp falls in the US overnight, as investors fret over the impact of the high price of oil, dealers said.
According to spread betting firm CMC Index, the FTSE 100 will open around 16 points down at around 5,306, after closing yesterday 21.9 points lower at 5,322.3.

MARKETS
FTSE 100 5,322.3, down 21.9
FTSE 250 7,697.0, down 9.6
DJIA 10,513.40, down 121.00
Nasdaq Comp 2,137.06, down 29.98
S&P 500 1,219.35, down 14.50
Tokyo: Nikkei midday 12,366.38 up 50.71
Hang Seng midday midday 15,357.76 down 85.86
Gold 444.05 usd (441.30 usd)
Oil - Brent Sept 65.41 usd (65.58 usd)

FORTHCOMING EVENTS
INTERIMS
Balfour Beatty
Cyprotex
Financial Objects

FINALS
None scheduled

AGMs
Van Dieman Mines

EGMs
None scheduled

ECONOMICS
BoE MPC August meeting minutes (0830 GMT)
UK labour market report (0830 GMT)

TODAY'S PRESS
* Inflation at eight-year high; core rate of 2.3 pct shocks analysts; investors remain confident of another rate cut; fuel costs push up US consumer prices - FT
* JP Morgan pays 1 bln usd to settle Enron claim - Guardian
* ASTRAZENECA may shut Swedish operations if proposed legislation to curb animal testing is implemented - Guardian
* HEYWOOD WILLIAMS sells its plastics division for 20 mln stg

PRESS COMMENT
FT
THE LEX COLUMN comments on PetroChina (targeting PetroKazakhstan), Coffee (market fundamentals look solid), SCHRODERS (sooner, rather than later, management must put (excess) capital to work), Israel (Israel's unusual risks should not deter well-diversified investors - ROK PROPERTY SOLUTIONS (p/e ratio of 11 times undemanding)
Times
RUMOUR OF THE DAY: MONSTERMOB (talk it is close to an earnings-boosting acquisition in China) - DIRECTORS' DEALINGS: UNITED BUSINES MEDIA (recently appointed chief executive declares a debut purchase of stock for 195,300 stg) - TEMPUS: WYEVALE GARDEN CENTRES (buy), SCHRODERS (worth holding), BPP (buy)
Telegraph
QUESTOR: CABLE & WIRELESS (best avoided), ROK PROPERTY (take profits), HEADLAM (worth a look)
Sun
ASSOCIATED NETWORK SOLUTIONS (Nigel Wray takes a 17 pct stake)
Mail
PENMC (gossip that a reverse takeover deal is on the cards)
Express
SHARE WHISPER: HALFORDS (renewed speculation that Japanese group Autobacs will buy the 18.33 pct owned by CVC Capital Partners) - WHO'S DEALING: MICHAEL PAGE (boss sells a third of his stake)
Guardian
ROYAL & SUN ALLIANCE (could be a target for Zurich Financial Services) - ALEXANDRA (talk of predatory interests from JOHNSON SERVICE GROUP)
Independent
THE INVESTMENT COLUMN: SCHRODERS (buy), ROK PROPERTY (hold), BPP (hold)

LSE bid comment

Whose shares is this going to hit this afternoon....?

The New York Times, CNN, ABC News and heavy plant maker Caterpillar all had computer problems caused by a family of malicious worms.

Also potentially of interest........

Xstrata said workers at its Rustenburg and Wonderkop ferrochrome mines in South Africa have lifted their strike after agreeing on a new pay package.

Well I don't know why but MCTY is going good today!
Shame 99% of the rest I hold aren't but such is life!
;>)