NZ stocks: shares buoyant as global stocks return to pre-attack levels

12.30 pm

The New Zealand sharemarket continued to track upwards this morning as global equities markets returned to levels not seen since last month's terrorist attacks.

The benchmark NZSE-40 was up 9.11 points, or 0.47 per cent, at 1936.35 by just after 11 am. Turnover was a healthy $50 million.

"The market has a good feel to it," Forsyth Barr Frater Williams dealer Wayne Schuler said.

"Friday is often a quieter day than midweek, but it is good to see that this market still has the volume in it here this morning.

"People are just starting to feel comfortable about the situation (following last month's attacks) and start investing back in here."

Market bellwether Telecom was leading the charge, up 6c at 441.

Drinks maker Frucor continued to attract good interest, following this week's bid for the company by France's Groupe Danone. It was up 3c at 246 in early trade -- well above Danone's $2.35 bid price.

Brokers said Frucor's rise in recent days suggested the French giant has undervalued the company or another bidder is in the wings.

Contact Energy slipped 4c to 404 after this morning reporting a net profit of $130.7 million for the September year, up 34.8 per cent from the previous year's $97 million. Analysts had forecast profits ranging from $101 million to $153 million.

Contact's share price has been pushed to record highs around 408 this week after majority shareholder Edison Mission offered $3.85 a share for the rest of the company it doesn't already own.

ABN Amro analyst James Miller said yesterday that based on Contact's estimate of the long run margin cost of building new power plant, its valuation should be $5.31/share.

Based on the industry consensus of the price of building new plant of $48/megawatt hour, Mr Miller valued Contact at $4.91. Contact had been trading at $3.45 before Edison's bid.

Other stocks to gain ground by mid morning included Fletcher Building, up a cent at 270, Powerco, up 5c at 205, Sky TV up 5c at 350 and Waste Management, up 13c at 260.

Brokers are expecting an announcement Waste Management later today after two large trades, totalling 8.3 million shares, took place in pre-market trade.

The shares, which equate to around 9 per cent of the company, changed hands at $2.50 each, Credit Swiss First Boston dealer David Price told Reuters.

" You would expect that there would be some disclosures made some time today (and) that may just put people more at ease," he said.

The shares have had a rough ride in recent days, hitting a year-low of $2.35 on Wednesday. They last traded up 13 cents at $2.60, against a year high of $4.90 set in February.

Waste Management's share register is dominated by institutions and this morning's crossings were likely to be the result of a selldown by one of those, Mr Schuler said.

On the downside, Tranz Rail was down a cent at 435, Sky City was down 15c at 1200, Baycorp slipped 9c to 1201, as did Fisher & Paykel at 1411.

In all, rises outnumbered falls 37 to 19 among the 101 stocks traded.

On Wall Street overnight, US stocks rose as investors looked past dour economic news to bet that tax and interest-rate cuts will usher in a rebound next year.

The technology-laced Nasdaq Composite Index rose 43.93 points, or 2.54 per cent, to end at 1775.47 -- its highest level since September 11. The broader Standard & Poor's 500 index rose 14.89 points, or 1.37 per cent, to 1100.09 -- its best close since September 6, while the Dow Jones industrial average jumped 117.28 points, or 1.25 points, to 9462.90 -- just 143 points shy of its September 10 closing level.

- NZPA