NZ stocks: Market hanging on a line over Contact

12.20 pm

Contact Energy remained the focus of the sharemarket when it opened this morning, topping the turnover and seeing its price rise another 5c.

Contact's parent company, the US-based Edison Mission, has made a takeover offer of $3.85 per share but the market continues to value the stock higher, with Contact's price trading at 3.96.

But brokers this morning said Edison was not likely to raise its offer until an independent valuation was done within the next couple of weeks.

"Under the new takeover regime there's no rush, the offers don't get sent out until October 30 and I think they're anticipating sending out the independent report around the same time. I think smart Contact shareholders will just be sitting on their hands," said Bryon Burke of ABN Amro Craig Equities.

In late morning trading, $6.8 million worth of Contact shares had changed hands, and the NZSE-40 capital index had risen 7.35 points to 1910.05 on a turnover of $17 million.

A divergence in Air NZ share prices is lessening, with NZ resident-only A shares steady at 30 and the freely tradable B's up 2c to 29.

Also up was market bellwether Telecom although brokers said the 7c gain to 446 was on light volume. Telecom stands to be one of the stocks most likely to benefit as Contact sellers look for other investments.

Brokers were anticipating a quiet day's trading. Stocks to rise included Carter Holt Harvey up 1c to 151, DB Group up 4c to 525, Guinness Peat Group up 1c to 159, Trustpower up 5c to 325, and Steel & Tube up 7c to 207.

Sky City was one of the few falls, dropping 5c to 1120.

There were 38 rises and 21 falls on 104 stocks traded.

On Saturday, news of more anthrax outbreaks spooked Wall Street investors and prompted tech stocks to drop by 3 per cent although it recovered slightly on an upbeat quarterly result from a network equipment company.

The overall market settled lower with the Dow losing 6 6.29 points or 0.70 per cent, to end at 9,344.16. The broad Standard & Poor's 500 Index shed 5.78 points, or 0.53 per cent, to 1,091.65 while the technology-laced Nasdaq Composite Index edged up 1.93 points, or 0.11 per cent, to close at 1,703.40.

Downbeat economic news on falling retail sales and rising inflation was offset by a report showing an unexpected rebound in consumer confidence.

But over the next two weeks, Wall Street will be pounded by thousands of announcements of corporate results. Analysts anticipate the reports will show profits fell by the highest percentage in a decade.

- NZPA