NZ stocks: Shares rally on INL sale

The New Zealand sharemarket rallied strongly today, with Tranz Rail providing the only discordant note.

The NZ50 gross index added 21.89 points, or 1.12 per cent, to 1981.72, while the NZSE-40 capital index - which takes into account dividend payments - rose 13.58 points, or 0.7 per cent, to 1947.10. Turnover of 23 million shares was worth a moderate $63 million.

Stocks to go ex-dividend today included The Warehouse (10.5cps) and Freightways (3.4cps).

Tranz Rail dropped as much as 13 per cent to an all-time low of 62c after ratings agency Standard & Poor's confirmed it has cut its long term rating on the rail operator to B-minus with negative creditwatch from BB-plus.

The shares have dived more than 25 per cent since Tranz Rail issued a profit warning a week ago and speculation is rife it will look to the Government for help.

"The market is now really looking towards the proposal the company is going to put to the Crown within the next month, I believe, in terms of the national network and probably also the sale of TranzLink and other sales," Macquarie Equities broker David Cleal said.

Elsewhere in the market, the big news was an announcement Independent Newspapers will sell its New Zealand publishing arm to Australia's John Fairfax Holdings Ltd for $1.19 billion.

INL's shares were suspended on Friday pending the announcement, but shares in its 66-per cent owned subsidiary Sky Network Television climbed to a high of $4.10 on speculation INL or its 45 per cent owner Rupert Murdoch's News Corp will mount a full takeover for the company. They closed up 10c at 405.

Market heavyweight Telecom, which owns 12 per cent of INL and 10 per cent of Sky, rallied 11c to 473 on the news. It has only ever been interested in the pay-TV assets, rather than the publishing business.

Among the other leaders Baycorp Advantage closed up 5c at 162 on the back of strong Australian interest, Carter Holt Harvey was steady at 162, Briscoe Group added a cent to 193, Contact Energy rallied 5c to 469 as power prices looked set for another spike, Fisher & Paykel Appliances was 25c higher at 1070, F&P Healthcare was 14c higher at 1044, Auckland International Airport rose 10c to 512, and Sky City Entertainment jumped 15c to 815.

Jeweller Michael Hill clawed back 21c to 431 after plunging sharply on the back of a profit warning late last week.

Rises outnumbered falls by 53 to 30 among the 126 stocks traded.

On the downside, The Warehouse shed 13c to 526 after going ex-div, Ports of Auckland fell 10c to 680, Lion Nathan dropped 5c to 600 and Air New Zealand slipped a cent to 44c.

- NZPA