NZ stocks: Market drifts lower

12.00pm

The New Zealand sharemarket followed offshore markets lower in quiet trading this morning.

The benchmark NZSE40 Capital Index was down 5.79 points or 0.28 per cent to 2052.92 by 11.30am, with 8.7 million shares worth $23.99 million having changed hands.

"Offshore markets are weaker so it's not giving us any great direction," Philip Hunter of First NZ Securities said.

Air New Zealand slumped 3c to 61c on the back of this morning's announcement of an annual after tax loss of $318.5 million.

The result included a one-off charge of $389 million relating to its failed investment in Australian carrier Ansett. After tax and before unusual items the company recorded an operating profit of $39 million.

Little of the stock is freely traded, after taking into account the Government's 82 per cent stake, BIL International's 5.5 per cent stake and Singapore Airlines' 4.5 per cent.

Future ownership of the airline remains a key issue, with talks continuing between Air NZ and Qantas over the Australian carrier taking a minority stake of up to 25 per cent.

Mr Hunter said the market was waiting to see what the final outcome would be for Air NZ's share structure.

"A number of brokers feel the stock is somewhat overvalued north of 60c and that is why it's back 3c today," he said.

Market leader Telecom added a cent to 500 on turnover of just under two million shares worth $9.55 million and Sky City Entertainment, which reported a $57 million net after tax full year profit yesterday, added a further 10c to a new high of 685 -- having gained 15c yesterday.

Fisher and Paykel Healthcare recovered 7c to 958 this morning. It had slipped 24c yesterday after Australian rival ResMed alleged Healthcare's anti-snoring masks had infringed intellectual property rights.

Fisher and Paykel Appliances added 3c to 993.

Briscoe Group added 8c to 275.

Tourism Holdings Ltd slipped 2c to 94c after reporting a big slide in profit to narrowly break even in the year to June.

The company blamed a significant drop in tourism arrivals following the September 11 attacks, coupled with the collapse of Ansett, for its fall in net after tax profit to $300,000, compared with $13 million a year earlier.

Port of Tauranga added 5c to 780. The company today posted a net profit after tax of $26 million for the year to June 30 and announced it would make a two-for-one share split, doubling the number of shares on issue to 133.8 million.

Of the 122 stocks traded so far, 36 rose and 38 fell.

On Wall Street stocks closed lower after a report fanned fears consumers will rein in spending and stifle an economic upturn, while a dull outlook from Intel Corp spurred selling in the tech sector.

The Dow Jones Industrial Average closed down 98.21 points, or 1.1 per cent, at 8820.80.

The tech-heavy Nasdaq Composite Index fell 43.91 points, or 3.16 per cent, to 1347.83.

- NZPA