NZ stocks: Market led higher by Telecom, Air NZ piques interest

6.00pm

Telecom New Zealand led the market into the black today, while interest was sparked by an agreement between Air New Zealand and Qantas.

The NZSE-40 capital index rose 8.55 points, or 0.44 per cent, to 1957.34, while the top-10 index gained 0.32 per cent to close at 880.41.

Turnover of 22.46 million stocks, valued at $58.04 million, was topped by Telecom's 4.67 million shares worth $21.87 million.

Air NZ was propelled 6c to a two-month high of 56c on news it had reached an agreement with Qantas, allowing its Australian rival to take a 22.5 per cent stake.

Just over 3.2 million Air NZ shares changed hands, worth $1.8 million.

The proposal has yet to receive approval from the Government as majority shareholder, and from competition regulators on both sides of the Tasman.

Qantas would pay $550 million for its stake by buying a new issue of Air NZ shares. The New Zealand carrier also planned a $220 million capital rights issue next year, although that decision had not been finalised.

Air NZ shares were put on trading halt this morning.

Although there was no news to accompany its solid performance, Telecom rose 9c today to close at 471, making up some ground lost when it began falling from 522 two weeks ago.

Barry Lindsay of First NZ Securities said the market was mildly positive today, although several blue chip stocks going ex-dividend today reflected their significant shareholder payouts.

Casino operator Sky City (ex-div 20cps) lost 27c to 765; Fisher & Paykel Appliances (34cps) lost 30c to 1060; and F&P Healthcare (23cps) fell 30c to 40.

Tranz Rail's head shares, adjusted to about 104 reflecting its rights which began trading today, fell 9.2c to 95. The rights closed at 20c.

The rail operator is raising $66 million in the underwritten rights issue to help it pay off debt and provide extra security to the Aratere interisland ferry leaseholders.

The rights issue could only proceed following a last-minute agreement with financier Citibank on Friday.

"You could say that in a very short space of time there was some quite good news that came out on Friday which you'd think would have set the scene for at least some stability and potentially some strength from this point onwards," Mr Lindsay said.

"But that hasn't followed through today ... implying that not all is right in the eyes of investors.

"You tend to get downwards pressure during rights trading as people try to arrange their affairs, so those holding them sell them because they don't want to put more money in, and the ratio of five new shares to every seven is quite high," he said.

Rights holders will have to pay 75c to convert their rights to full shares.

Contact Energy closed up 2c at 389, Baycorp Advantage was up 2c at 228, The Warehouse gained 4c to 740, Sky TV gained 4c to 330, and Carter Holt Harvey lost 2c to 167.

Hawke's Bay meat company Richmond rose 55c to a five-month high of 245, after a High Court decision on Friday ordered South Island rival PPCS to either make a successful takeover or lose all influence it has in the company.

The court also ordered PPCS to forfeit 6.9 million shares worth an estimated $10 million, equivalent to 16 per cent of its stake, and pay costs to the plaintiffs.

PPCS has 10 days to respond and may yet appeal the decision.

There were 49 falls and 46 rises on the 132 stocks traded.

- NZPA