NZ stocks: Market led down by Telecom tumble

6.00pm

New Zealand's benchmark index lost more than 1 per cent of its value today as market leader Telecom tumbled 3 per cent.

First NZ Capital research manager Barry Lindsay said the fall came after a reasonable day yesterday, in which the top-50 index close up 0.13 per cent.

"The backdrop was never going to be positive for today given the weakness of the overseas markets and the reasonably sharp sell off in the Dow Jones at the close.

"I think the reasons why we're weaker are stock-specific issues rather than the lead provided by offshore markets overnight."

However, compounding a dour global outlook as markets consider the post-war scenario, today's New Zealand Institute of Economic Research's quarterly survey of business opinion showed business confidence plummeted to a 17-year low in the March quarter.

That was due to local nervousness over the war in Iraq and possible power shortages in New Zealand took their toll.

The NZ50 gross index fell 27.23 points, or 1.38 per cent, to 1947.30, while the top-40 index was down 1.24 per cent at 1917.73.

Turnover of 27.06 million stocks, valued at $73.26 million, was topped by Telecom's $20.85 million.

Among market leaders to fall were Telecom, down 3.2 per cent or 15c at 457, Auckland International Airport, down 4 per cent or 22c at 502, and Carter Holt Harvey down 4c or 2 per cent at 161, and Sky City, down 10c or 1.2 per cent at 805.

Telecom's fall was partly a reaction to its strong gains in recent days, from a low of 411 on March 3.

"It's also due to some concern about the Telecommunications Commissioner's report due today on its local loop. No-one was expecting any great drama but the market has decided to pull back ahead of this," Mr Lindsay said.

Auckland Airport's slide was due largely to Qantas' announcement yesterday that it would make 1000 staff redundant as the impact of war in Iraq, the deadly flu virus and general weak economic conditions bite.

The resounding "no" from commerce commissions on both sides of the Tasman on the proposed alliance between Air New Zealand and Qantas was also surprisingly negative.

The draft rulings by New Zealand's Commerce Commission and the Australian Competition and Consumer Commission said the strategic alliance would substantially lessen competition.

Air NZ fell 3c to 45.

Jeweller Michael Hill shares plunged 7.5 per cent today, or 33c, to an 18-month low of 410 after it lowered its full year forecast.

"That seems quite understandable and appropriate given the indication of profits for the full year given today," Mr Lindsay said.

The company said it expects an operating profit of between $9.5 million and $10.5 million for the full year to June.

It said a rising New Zealand dollar and high infrastructure costs associated with its Canadian expansion meant its operating profit would be about 14 per cent weaker than the previous year.

Tranz Rail fell 4c to 75, above the fresh low of 73 touched during the day. The company's stock has plunged from 90 a week ago after it reduced its earnings forecast on Monday, then dismissed ratings agency Standard & Poor's on Tuesday.

Contact Energy was up 3c at 457, Fisher & Paykel Appliances continued its rise off 930 at the start of the month, to close up 5c at 1035 today, and its sister stock Healthcare was up 5c at 1010.

Baycorp Advantage rose 2c to 154, Lion Nathan was up 13c at 608, Restaurant Brands was up 3c at 146, Tower gained 2c to 210, Westpac rose 12c to 1612, and Powerco was up 2c at 152.

AMP was down 16c at 795, The Warehouse lost 2c to 546, and Fletcher Building fell 3c to 321.

There were 44 falls and 39 rises on the 120 stocks traded.

On Wall St, the Dow Jones industrial average dropped 100.98 points, or 1.22 per cent, to 8197.94; the Nasdaq Composite Index sank 26.20 points, or 1.89 per cent, to 1356.74; and the broad Standard & Poor's 500 retreated 12.30 points, or 1.40 per cent, to 865.99.

- NZPA