NZ stocks: Index continues roll

Investors, buoyed by news of fresh takeover activity -- this time at BIL International -- continued to ignore weak retail sales figures, a slump in business confidence, and domestic inflation figures, to push the benchmark index to new highs this morning.

By late morning, the NZSX-50 gross index was trading up 3.85 points at 3327.90, bettering yesterday's closing high of 3323.68. The longer running NZSX all capital index was up 1.32 points at 1045.25.

Egged on by further rallies on Wall St's Nasdaq index, investors continued to turn a blind eye to the weakening economic outlook.

Forsyth Barr broker David Price described the gains as "a continuation of the trend".

"There's been a whole host of corporate activity in the last month or so. And obviously (the potential takeover of) Brierleys -- there's 50,000 New Zealand shareholders -- and if a full takeover is to be made it's going to be more money coming back into the market."

Hong Kong property group Guoco is reported to be preparing a full buy-out offer for BIL International -- the former investment vehicle of corporate raider Sir Ron Brierley -- in a deal that would value the company at as much as to US$1.8 billion ($1.62 billion).

BIL's main asset is the Thistle hotels group, which it took private in 2003 for £627 million ($1.6 billion).

Shares in BIL were suspended yesterday pending the announcement. They last traded at 104, against a year high of 107.

Mr Price said another factor of the rise was that the market was attracting Australian investors -- "more so than before".

"They like Telecom more than Telstra and (NZ) airports are cheaper than the Australian all-tenders."

Three years ago just 3 per cent of Telecom was owned by Australian investors, and now it is about 25 per cent, he said.

"There's been a huge shift."

Among the leading retail stocks, The Warehouse added 3c to 358 this morning, as did Fisher and Paykel Appliances to 364, while children's clothing retailer Pumpkin Patch was flat at 275.

Statistics New Zealand figures out yesterday show retail sales dipped unexpectedly in May -- by 0.6 per cent, against expectations of a 0.5 per cent rise. Department store sales were up, while appliance, motor vehicle and recreational goods sales were down.

In general, trading was fairly light this morning, with just 6 million shares worth $27.5 million changing hands.

Rises outnumbered falls by 25 to 19 among the 102 stocks traded.

Consumer Price Index data showing inflation came in at 2.8 per cent in the June year -- at the top end of the Reserve Bank's 1-3 per cent target band, barely registered with investors.

Top stock Telecom was up 4c at 625 ahead of the company's full year result on August 5, when the company is expected to announce a special dividend or capital repayment.

Market No 2 Contact Energy slipped 2c to 788; Sky Network TV was 5c down at 600, after gaining 7c yesterday at at 610; Fletcher Building slipped 3c to 697; Auckland International Airport rose 1c to 233; and Fisher and Paykel Healthcare was down 2c at 358.

- NZPA