Telecom shares lose yesterday's gains

The sharemarket ended the day with modest losses even though United States stocks surged on Thursday after the unveiling of the Federal Reserve's plan to boost the US economy.

The benchmark NZX-50 index closed down 7.092 points, or 0.213 per cent, at 3319.1459.

The market had reached its highest level in nearly six months around 3342.5 points in early trading. NZX also said it encountered a systems error that affected its index calculations between 12.03pm and 12.48pm local time.

Telecom slipped 4c to 207, giving up most of the previous day's 5c gain after reporting a 0.9 per cent fall in first quarter adjusted earnings before interest, taxation, depreciation and amortisation as it absorbed $16 million in new regulatory costs and faced intensifying competition.

Some investors may have been expecting a special dividend or a share buy back plan and that may have boosted the stock on Thursday, said James Lee, head of institutional equities at First NZ Capital.

"It has reversed what it put on yesterday but it traded on pretty low turnover. It is not really a reaction to the result," he said.

The market was also was held back by the rise in the NZ dollar and investors were waiting for non-farm payrolls data in the US tonight.

Briscoe Group shares rose 3c to 146 after reporting a 6.5 per cent rise in third quarter sales. The company said it had a significant late rally in sales leading up to the October 1 rise in GST, but during October sales and margin tightened.

Fletcher Building lifted 11c to 824 early but closed up just 3c at 816 and Contact Energy lifted 8c to 600 but closed down 1c at 591.

Shares in accounting software company Xero rose 2c to a record 181. The stock rose sharply on October 22 when it was announced that US investor Peter Thiel will invest $4 million to support Xero's expansion into the US market.

Mainfreight was up 5c to 739, Port of Tauranga gained 3c to 743, and Nuplex eased 8c to 347 after initially lifting 3c to 358.

OceanaGold rose 29c to 464, while Smiths City Group rose 2c to 38. Scott Technology eased a cent to 137.

Michael Hill fell 3c to 77 on the day of its annual meeting.

In the US, stocks extended a rally that started in September to close at two-year highs.

Confounding expectations of a sell-off after the Fed's asset-buying plan, investors instead focused on the flood of cheap money expected to flow into the banking sector from the US central bank's plan to buy more Treasury debt.

Retail stocks surged after October's same-store sales data, which appeared to bode well for the upcoming holiday shopping season.

The Dow Jones industrial average closed up 2 per cent at 11,434.84, the Standard & Poor's 500 Index was up 1.9 per cent at 1221.05, and the Nasdaq Composite Index was up 1.5 per cent at 2577.34.

- NZPA