MOSCOW (AP) _ Oil companies AO Yukos and AO Sibneft have called off talks to form what would have been Russia's largest oil producer, blaming the instability of the Russian stock market and the slump in world oil prices.

The two companies said in a statement Monday that they plan to continue with previous joint marketing and refining projects.

The companies announced their intention to merge in January. Earlier this month, Yukos chairman Mikhail Khodorkovsky said the merger would be delayed until the end of the year, but that it was going ahead.

However, there has been mounting speculation in the past few days that the merger talks had failed and reports that the sharp drop in the world market oil prices has severely dented the companies' finances.

The merged company had been expected to be one of the bidders for a controlling stake in Russian state-owned oil company AO Rosneft for which bidding closes Tuesday.