NZ Stocks: Shares piggyback on Telecom rally

The New Zealand sharemarket snapped back into positive territory today, buoyed by a rally in market heavyweight Telecom.

The NZ50 gross index ended 8.8 points higher at 1933.60, while the NZSE-40 capital index was up 4.4 points at 1895.04. Turnover was worth a moderate $85 million.

Telecom, which accounts for 28 per cent of the top 50 and 21 per cent of the top 40 index, closed up 11c at 461 on shares worth $36 million.

Forsyth Barr Frater Williams broker Richard Burton said the stock has been boosted by speculation it may increase its dividends and by its heftier weighting in the month-old NZ50 index.

"Index buying, a bit of offshore buying, safe-haven buying and the future outlook for dividends are all helping the stock," he said.

Sentiment in the broader market was less upbeat, however.

Tourism stocks took a turn for the worse as the global spread of a deadly pneumonia-like virus started to take its toll on the local economy.

Severe acute respiratory syndrome has killed at least 65 people worldwide and infected about 1900 others, most in east Asia.

New Zealand has no confirmed cases, but if the disease hits the country productivity will be hit hard.

The Bank of New Zealand said today tourism, which contributes 4-5 per cent of New Zealand's gross domestic product, was already under stress with airlines cutting flights.

Any further spread of the disease could force the Reserve Bank to make interest rate cuts.

New Zealand's biggest airport operator, Auckland International Airport, shed 14c to 505 and national carrier Air New Zealand eased a cent to 48c today.

"The disease is affecting people's travel plans," Mr Burton said.

Sky City, which has a big Asian customer base, shed 4c to 785.

Retailers were also sold off today. The Warehouse lost 6c to 551, Briscoe Group lost 2c to 183 and Michael Hill closed a cent lower at 414.

Retail figures out across the Tasman today, where both The Warehouse and Michael Hill have operations, disappointed the market.

Australian retail trade rose just 0.3 per cent in February, compared with forecasts centering on a 0.6 per cent gain, raising concerns that a mainstay of the economy's strength has been sapped as consumer confidence wanes.

On the upside Fletcher Building recovered 10c to 343 and Fisher & Paykel Appliances added 12c to 945 after the pair were sold off yesterday on the back of poor residential construction figures.

In other moves, Carter Holt Harvey lost 6c to 171, Fisher & Paykel Healthcare lost 10c to 915, WestpacTrust added 40c to 1600, Baycorp Advantage rose 3c to 139, Lion Nathan lost 8c to 560 after announcing it is on the acquisition trail for more wineries, and Contact Energy added 6c to 432.

Rises outnumbered falls by 41 to 39 among the 121 stocks traded.

On Wall St, the Dow Jones industrial average closed up 77.73 points, or 0.97 per cent, at 8069.86; the Standard & Poor's 500 Index rose 10.29 points, or 1.21 per cent, to 858.47; and the Nasdaq Composite Index gained 7.10 points, or 0.53 per cent, to 1348.27.

- NZPA