NZ stocks: Market boosts from Telecom bounce

12.00 pm

Telecom rebounded strongly this morning from a major selloff yesterday, providing an early fillip to the sharemarket.

Just after 11am the NZSE-40 capital index was up 18.60 points to 2073.51 on turnover worth $22.5 million.

Telecom was up 14c to 497 on $12.9 million worth of shares.

Yesterday the stock closed down 22c after the Australian Financial Review quoted unnamed sources as saying Verizon was having trouble finding buyers for a planned sale of its 21.5 per cent Telecom stake. Verizon, a New York-based telco, has been plagued by weak growth in its home market.

Today brokers were eyeing Telecom with a little caution.

Verizon was "the wild card -- that's why I think it will have a few problems getting through $5 without running into the same selling we saw yesterday", said Sam McDonald of DF Mainland.

Mr McDonald said that "possibly yesterday was a bit of a panic," but similar things had happened when a parcel of Telecom stock was last placed, occurring at a considerable discount to the then-share price.

"So I don't think the game plan has changed that much from yesterday. Certainly under $5 Telecom is good buying -- I don't see a lot of downside from these levels, but with this parcel hanging over the stock, you certainly won't see a lot of upside at the moment."

The market was also keenly awaiting Air New Zealand's half year result this morning. The stock was trading steady at 34, despite a $376.5 million loss, which included unusual losses of $300.9 million.

Brokers said the result was in line with expectations. But hopes the airline would be profitable again within 24 months were greeted with caution. Air NZ's recovery was still "in an incubation stage," Mr McDonald said.

"I don't think it will spur a big selloff or for that matter a bit of buying. We saw quite a bit of interest in it yesterday from Australia on the back of Virgin, so I think that's about all that will spark a bit of interest in Air NZ."

Media reports said Virgin was talking to Air NZ about taking either a stake in the airline or its subsidiary, Freedom Air.

Meanwhile, Auckland Airport continued to soar on a good result and strong portfolio interest, up 6c today to 424.

Other improvers were Carter Holt Harvey up 2c to 196, BayAdvantage up 10c to 660, and Nuhaka up 18c to 900.

On the downside was Bendon bidder Pacific Retail Group down 7c to 210, and Steel & Tube down 14c to 261. Yesterday the US imposed heavy tariffs on imported steel, but Steel & Tube does not export to that country.

Fisher & Paykel Healthcare was steady at 995.

So far there have been 35 rises and 12 falls on 91 stocks traded.

Meanwhile on Wall St, blue chip stocks resumed their upward march Wednesday, energised by more encouraging economic news.

The Dow closed up 140.88, or 1.4 per cent, at 10,574.29, rebounding almost completely from a 153-point loss the previous session.

Broader stock indicators also moved higher. The technology-focused Nasdaq composite index rose 24.10, or 1.3 per cent, to 1890.39, while the Standard & Poor's 500 index advanced 16.63, or 1.5 per cent, to 1162.77.

- NZPA