NZ stocks: Stronger Telecom props up market

The sharemarket took a breather yesterday from its recent gains, which had been helped by last week's interest rate cut.

Brokers say the benign interest rate climate could continue to drive interest toward equities, although investors are unlikely to take too many risks in the short term, because of the uncertain global economic outlook.

The NZSE-40 capital index fell 5 points to 2018.90 on moderate turnover of $75.7 million.

Falls outweighed rises 51 to 48 on the 137 stocks traded.

"It's a continuation from last week of a short-term consolidation phase," said DF Mainland broker Sam Macdonald.

Telecom rose 3c to $4.90 on solid turnover. Brokers say Telecom, which hit eight-year lows last month, appears to have established new support above $4.80 as investors back the company to weather the global storms that have hurt other telcos.

In particular, the market is waiting for revised weightings in US funds manager Morgan Stanley's capital international indices at the end of the month. Suggestions are that the MSCI's view of Australian stocks could rub off on the telco and other sectors in New Zealand.

Stocks to fall included Baycorp down 11c to $11.79, and Carter Holt Harvey down 4c to $1.63.

Fisher & Paykel Healthcare, which last week had a successful Nasdaq IPO and NZSE listing after being split off from Fisher & Paykel Industries, closed sharply down after losses in its US-listed stock.

Fisher & Paykel Healthcare lost $1, or 6.5 per cent, to $14.50 on volume worth more than $15 million.

Brokers say the company still has strong potential, and some analysts put its value at close to $17 a share.

Fisher & Paykel Appliances slipped 35c to $8.55.

Takeover target Contact Energy also traded actively, but closed down following its record date for an 11c dividend. The stock was down 11c at $3.94.

Most fund managers and brokers have labelled Edison Mission's effective $4.14 a share offer as insufficient and say Edison is unlikely to reach the target of 90 per cent on which its bid is conditional.

Some of the downturn was due to companies going ex-dividend yesterday. They included the Warehouse down 16c to $6.35. DB Group was steady at $5.85 after going ex-dividend 15.5c and fishing company Sanford was up 7c to $6.15 - it went ex a 12c dividend.

Sky City ended up 2.5c to $6.40. The stock, which was split 2 for 1 from yesterday, rose by 22.5c at one stage.

Frucor which on Friday rose to $2.50, just 2c off its year high, slid 10c to $2.40 yesterday. On Friday, shareholders received an independent directors' report, rejecting a $2.35 a share takeover offer from French company Danone.

Wakefield Hospital was down 18c to $1.80 after announcing a 60 per cent profit drop on Friday.

Telstra jumped 17c to $6.34 and Air NZ shares were up 3c to 32c (A shares) and 33c (B shares). United Networks was up 10c to $8.45.

Lion Nathan, which announced it now had 40 per cent control of Australian winery Banksia, rose 7c to $5.45.

TrustPower was unchanged at $3.22 after announcing a $12 million loss for the half year. It blamed the loss on high wholesale electricity prices.

- NZPA