NZ stocks: Market up as war talk eases, Tranz Rail on a roll

6:00pm

Most blue chips on the New Zealand sharemarket gained ground today as some fears over a United States invasion into Iraq appeared soothed.

The NZSE-40 capital index closed up 9.42 points, or 0.46 per cent, at 2045.84, while the top-10 index was up 0.39 per cent at 907.35.

Turnover of 24.00 million stocks, valued at $74.31 million, was topped by Telecom's 3.44 million stocks worth $16.77 million.

Tranz Rail was on a roll today, closing up 10c at 168 despite being handed a downgrade by credit ratings agency Standard & Poor's yesterday.

"The bad news is mostly out there," Andrew Kelleher of ASB Securities said.

"It's removed the thing financial markets hate the most, uncertainty. Certain people believe enough risk has been priced in - some brokers have a valuation on this stock of 300, over time," Mr Kelleher said.

S&P's said Tranz Rail's ratings were on creditwatch with negative implications due to uncertainties surrounding the company's long-term bank funding.

Last week Tranz Rail delivered a bottom-line loss of $122.7 million for the year, in line with its forecast but well down on the previous year's net profit of $5.6 million.

He expected world equity markets to perform well overnight as they digested the news that Iraq has agreed to allow entry to United Nations weapons inspectors, potentially lessening the chances of a US invasion.

While it appeared to have had little impact on stocks today, new Reserve Bank governor Alan Bollard and Finance Minister Michael Cullen signed an agreement that gives the central bank more leeway in meeting a narrower inflation target.

The new five-year Policy Targets Agreement raises the bottom limit of the inflation target, so the bank will aim for a 1-3 per cent band rather than 0-3 per cent.

On the market, Fletcher Building fell 4c to 281 on high volume of 1.52 million stocks, Contact Energy lost 2c to 386, The Warehouse shed 3c to 737, fellow retailer Briscoe Group was down 5c at 264, and Baycorp Advantage shed 2c to 398.

Market leader Telecom rose 2c to 491, Australian telco Telstra gained 8c to 573, Fisher & Paykel Appliances rose 10c to an eight-month high of 1040, and F&P Healthcare hit a six-month high of 1001, up 19c.

Sky City rose 5c to 715, financial services company Tower was up 7c at 395, UnitedNetworks gained 1c to 983, Auckland International Airport was up 2c at 432, and market minnow Skellmax was up 2c at 104 on heavy volume.

Mr Kelleher said some investors appeared to have sold out of fellow newcomer Vertex, which also listed in June, after its share price plummeted following a recent profit warning, and bought into Skellmax.

Vertex listed at 205 and closed today at 128, while Skellmax listed at 115.

"People are looking at Skellmax and saying, there aren't the same number of risks as Vertex, and it will pay a nice dividend in 2003," he said.

Fast food and coffee franchise company Restaurant Brands was unchanged at 193 after posting second quarter sales of $94 million, a 17.7 per cent increase on the same period last year.

Restaurant Brands owns the New Zealand outlets for Pizza Hut, KFC and Starbucks.

Investment company Pure New Zealand rose 2.5c to 7.5 after almost halving last year's losses, posting a June year net loss of $656,000 after tax.

Jeweller Michael Hill fell from fresh highs today to end down 15c at 585 after the company announced a special 20c per share dividend.

There were 59 rises and 37 falls on the 144 stocks traded.

On Wall St the broad Standard & Poor's 500 ended up 1.29 points, or 0.14 per cent, at 891.10; the Dow Jones industrial average, which groups 30 blue-chip stocks, was up 67.49 points, or 0.81 per cent, at 8380.18; and the tech-packed Nasdaq Composite Index lost 15.52 points, or 1.20 per cent, to 1275.88.

- NZPA