NZ stocks: Market drifts lower as AMP soars

12.00pm

The rise in AMP shares today was the feature on a sharemarket that was otherwise drifting.

AMP rose 36c to 606 on rumours that American buyout firm Kohlberg Kravis Roberts was leading a £1 billion ($2.8 billion) buyout of the troubled financial services's British unit.

JB Were broker Joe Gallagher said the bid was well below his firm's £1.4 billion valuation of AMP's British assets. However, he expected AMP's shares to continued to firm through the session.

The top 50 gross index was down 5.43 points to 2014.68, and the top 40 capital index was down 1.13 points at 1984.64 at 11.50am.

Turnover of $29.6 million was boosted by $11.6 million worth of AMP traded.

Mr Gallagher said AMP's planned restructure, dividing the British business from the Australasian unit, was probably partly designed to flush out bidders for the British life business.

"The price is always the most important thing. We valued this business at about £1.4 billion so a bid of £1 billion will basically bring back our AMP valuation from about $6 to about $5.50.

"We are still very cautious of this company but after the late rally in Australian on Friday, it looks like it will continue a little bit today."

There was no positive lead from the US on Friday where the Dow Jones industrial average fell 34 points or 0.4 per cent.

Market leader Telecom took a breather, falling back 5c to 487 after its good run in the last six weeks.

Fletcher Building initially rose 7c to 3.46 but fell back to 341. Mr Gallagher said a rise in Building shares seemed counter-intuitive given construction activity is expected to ease as the economy slows. However, he said there was a valuation gap on the stock and good underlying support.

Fisher & Paykel Healthcare, due to report its half year result on Thursday fell back 16c to 1079. The rise of the New Zealand dollar to new five year highs today is seen as a negative for the stock.

F&P Appliances fell 9c to 1091.

Contact Energy fell 1c to 458, Infratil rose 3c to 193.

Tranz Rail, subject of bid at 75 cents on Thursday, rose 1c to 80c.

Among other moves, Kirkaldies rose 4c to 350, and Designer Textiles rose 3c to 95.

There were 30 rises and 21 falls among the 95 stocks traded.

- NZPA