NZ stocks: Market makes big strides on news of war advances

6pm

The New Zealand sharemarket made big strides today after United States troops advanced on Baghdad during the weekend.

Volume was good for a Monday, with the 25.50 million stocks traded valued at $67.06 million. Topping turnover was Telecom's $24.49 million.

The benchmark NZ50 gross index closed up 29.61 points, or 1.52 per cent, at 1975.59, while the top-40 index was up 1.5 per cent at 1940.

JB Were senior investment adviser Peter Stokes said the market was underpinned by movements in the United States on Saturday, NZ time, and by apparently positive developments in Iraq.

"Pretty good for a Monday, and it seems to be widespread, across the board," Mr Stokes said.

However, one black spot was rail operator Tranz Rail, which closed down 18c at a record low of 77c after revealing today it would not meet third quarter sales and profit targets.

An $11.3 million fall in revenue, which it blamed on "climatic conditions", lowered earnings before interest and tax to $19.1 million -- $10.2 million below its forecast.

"The market, in a stock like Tranz Rail which is struggling at the best of times in terms of credibility ... takes a pretty sharp scalpel to news of that kind," he said.

"There will be a degree of caution as to whether they can achieve the forecast figure for the fourth quarter, and there must be some potential downside risk on the year-end (earnings) figure of $47 million.

"It's a nervous ride from here," he said.

On a brighter note, Auckland International Airport Auckland Airport shares rebounded off a 13-month low of 482 on Friday to close up 17c at 520 as investors looked through the short term distractions of the war and Sars.

"At the end of the day that impacts mainly on passenger movement, and that only makes up about 16 per cent of the company's revenue. So taking a medium to longer term view, the impact is pretty minimal," Mr Stokes said.

Ports of Auckland closed up 23c at 688 although volume was low.

"It's a high yield company, which is good in this sort of market. Lion Nathan was up 5.5 per cent (up 33c at 613).

"There were a couple of stocks which had particularly good days, probably just a fallout from the tone in the market at the moment which is still pretty cautious, with people fine-tuning portfolios and repositioning.

"There's still a bias towards defensive and high-yielding stocks."

Telecom and Australian rival Telstra piled on gains, closing up 8c at 468 and 18c at 465 respectively.

"When you get broad market sentiment it will often filter from the top down, the larger cap stocks, more liquid stocks."

Elsewhere on the market, Baycorp Advantage was up 5c at 148, Contact Energy gained 7c to 450, The Warehouse was up 7c at 547, Fisher & Paykel Appliances rose 20c to 1025 and Healthcare gained 13c to 993.

Westpac was up 45c at 1620, Tower rose 5c to 205, Sky City gained 11c to 800, Axa was up 15c at 242, and AMP rose 8c to 820.

On the down side, Pacific Retail lost 2c to 207, Restaurant Brands was down 2c at 135, Tourism Holdings which went ex-dividend to the tune of 4c lost 3c to 101, and Sky TV lost 2c to 363.

There were 70 rises and 20 falls on the 130 stocks traded.

In offshore trade on Friday, the FTSE-100 gained nearly 3 per cent while on Wall St the blue-chip Dow Jones industrial average rose 0.45 per cent to 8277.15, and the technology-laced Nasdaq Composite Index fell 0.94 per cent to 1383.51.

- NZPA