NZ stocks: Market stretches to sixth successive session gain

A solid performance from market leader Telecom helped the sharemarket post its sixth successive gain and pushed the benchmark top 50 index to new 11 month highs.

The NZ50 gross index closed off its sessions up 5.86 points, or 0.3 per cent, to 2064.52, on modest turnover worth $61.7 million.

The top 40 capital index rose 5.04 points to a six month high of 2035.36, while the top 10 capital index gained 3.41 to 939.19 and the small stocks index gained 44.45 to 5792.93.

Interest centred on financial services company Tower, which initially fell 3c to 143 on news of its first half result and details of its capital raising today. But investors seemed to approve the restructuring that will deliver de facto control to investment company Guinness Peat Group, with the stock closing up 8c at 154.

Tower posted a first half net loss of $154 million and said it would raise $200 million through the placement of 50 million shares with 10 per cent shareholder GPG at $1.35 per share, and a pro-rata renounceable rights issue of $135 million with an exercise price of $1.00.

GPG shares closed down 2c at 143.

Richard Leggat, head of research at UBS Warburg, said Tower's price firmed because people could see GPG would stand behind the company.

"They have obviously still got problems in some of their operations, particularly in Australia. Until we see some progress being made in their Australian operations we would remain relatively cautious."

GPG could end with 30 per cent after underwriting the rights issue.

"Some people believe they may wrest control in a manner that is not all that transparent. But pragmatists might say that Tower has got some problems and needs some money and its good GPG is there," Mr Leggat said.

"The purists would say they (GPG) have effectively taken control, or are likely to take control, at a reasonably cheap level with information that the market hasn't had."

Topping turnover was freight company Owens, which said today that fellow listed company Mainfreight had taken a 10.08 per cent holding.

The 5.8 million Owens shares in the transaction were valued at $5.5 million. Mainfreight closed 4c up at 140 and Owens gained 7c to 94.

ABN Amro Craigs equities advisor Nigel Scott said continued yield-chasing from investors boosted some blue chip stocks today.

"Same theme as before, people continue to chase yield, some of the heavyweights - not big volumes here but the market still seems to be supported from that side," Mr Scott said.

The local market got a strong lead from major markets overseas.

Mr Leggat said "the world's rosy and we have been lagging the region noticeably".

Telecom closed up 5c at 513, while No 2 stock Carter Holt Harvey gained 2c to 162.

Independent Newspapers Ltd continued its good run since the announcement of the sale of its papers to Fairfax, rising 2c to 434, while its two thirds-owned Sky TV gained 4c to 445.

But there was profit taking in some stocks which have had good gains recently. Fletcher Building fell back 3c to 351, Auckland Airport fell 6c to 550, while Fisher & Paykel Appliances fell back 11c to 1109 ahead of tomorrow's result. F&P Healthcare rose 9c to 1079.

Tranz Rail gained another 2c to 88c and the market is still holding its breath in anticipation of what Australia's Toll Holdings will do.

The Owens-Mainfreight activity was linked to Tranz Rail.

"Obviously they're trying to think about the prospect of (Australia's) Toll Holdings, if they get a good holding in New Zealand, what that will mean for the opposition," Mr Scott said.

"If Toll gets Tranz Rail and (road transport division) TranzLink, that creates a pretty solid opposition block to Mainfreight and possibly Owens," he said.

Ryman Healthcare rose 11c to 175 after the retirement village developer and operator reported a record full year net profit after tax of $15.3 million, up $4 million from last year.

Westpac NZ rose 19c to 1734.

NGC fell 6c to 161 and Contact Energy fell 2c to 468, possibly in response to news that power prices were falling. TrustPower, which has a generating shortfall, rose 15c to 450.

Turners Auctions gained 10c to 320 following news yesterday of its Canadian joint venture.

There were 53 rises and 28 falls on the 123 stocks traded.

- NZPA