NZ stocks: Market weakens in line with Wall St

12.00pm

The sharemarket fell 0.7 per cent today, mainly in response to another Wall Street slump as fears of a double dip weakening of the United States economy increased.

Shares in Rubicon fell after the deal for Fletcher Forests to buy the Central North Island Forestry Partnership collapsed last night.

Rubicon was down 4c to 68 cents at 11.30am. Fletcher Forests preference and head shares both initially fell a cent, to 21 and 22 respectively, after shareholders voted against its proposed $1.4 billion purchase of CNI. But the head shares later recovered to 23c.

Rubicon owns 17.6 per cent of Forests and if the deal proceeded would have sold its stake for 37 cents a share.

The NZSE-40 capital index fell 14.42 points, to 2015.40 on turnover worth just $11.5 million. The market took its lead from Wall Street where the Dow dropped more 2.4 per cent after the United States Federal Reserve left interest rates unchanged because of uncertainty about the economic outlook.

The Reserve Bank of New Zealand followed suit, leaving the cash rate at 5.75 per cent, mainly because of the wobbly world outlook.

"We are suffering from a lack of interest," Forsyth Barr Frater Williams executive director Don Turkington said.

"The market is soggy and taking its lead from the US. We are all a bit fearful of what's happening in the US and of further downside rubbing off."

He said the RB's decision to leave rates unchanged had been widely anticipated and it would have been a surprise to have done otherwise given that the Federal Reserve had moved to an easing biase.

"We are increasingly seeing a do-nothing stance from the RB."

He said the market appeared to be adopting a wait-and-see approach to Fletcher Forests.

"Clearly, Fletcher Forest shareholders are not panicking."

Guinness Peat, the 19.9 per cent owner of Rubicon was steady on 169.

Fletcher Building dropped 7c to 285 despite announcing a $93 million net profit, ahead of the consensus forecast of $85 million.

Elsewhere, Telecom fell 2c to 496, Carter Holt Harvey fell 4c to 173, as did Contact Energy to 386. Air New Zealand fell 2c to 60, as did Briscoe to 251 while The Warehouse fell 3c to 725.

Sky City was down 4c to 640 but Ryman Healthcare was up 7c to 168 after announcing a strong half year profit yesterday.

Yesterday's big gainer, Fisher & Paykel Appliances, partially pulled back, losing 6c to 951.

There were 26 falls and 14 rises among the 86 stocks traded to date.

- NZPA