NZ stocks: Shares surge on interest rate outlook and corporate news

6.27pm

The New Zealand sharemarket surged 1 per cent higher today on trans-Tasman corporate activity and the prospect that recent interest rate hikes have come to an end.

The benchmark NZSX-50 gross index closed 28.23 points or 1.02 per cent higher at 2807.15, while the NZSX all capital index closed 8.59 points or 0.93 per cent higher at 930.55.

ABN Amro Craigs retail equities adviser Nigel Scott said the New Zealand market was experiencing "a relief rally" on news that today's Reserve Bank rate hike by 25 basis points to 6.5 per cent would likely be the last for some time.

Concerns there would be at least another rate hike this year had subdued recent sessions on the local sharemarket.

Reserve Bank governor Alan Bollard today signalled the end of the tightening cycle despite noting the economy was still performing strongly and had continued to deliver positive surprises.

UBS Warburg broker Paul Nicholson said the market appeared to have taken heart from the news.

"It's good for the markets, hopefully good for the economy and good for the country," he said.

Meanwhile, Mr Scott said the New Zealand market had benefited from activity in Australia. New Zealand dairy giant Fonterra today made a takeover offer for Australia's National Foods and Xstrata bid for Australian miner WMC Resources.

"That's just continued to boost the Australian market which has had a couple of big days in that regard," he said.

Australian banks enjoyed good gains on the local market with ANZ up 60c to 2170, and Westpac also up 60c to 1920.

"New Zealand stocks listed in Australia have benefited from a fall in the currency and also a firm aussie market," Mr Scott said.

Market lea der Telecom was up 2c to 577, while BayCorp Advantage was up 3c to 358 and Tower was up 6c to 232.

Elsewhere there was evidence of some "bottom fishing" today.

" We've had several stocks ex dividend over the last few weeks and trying to find a new level," Mr Scott said.

Among these were Fletcher Building which was up 9c to 541 and Auckland International Airport which rose 6c to 717.

Total turnover for the day was worth $114.13 million and there were 92 rises and 26 falls among the 161 stocks traded.

Guinness Peat Group (GPG) was up 7c. Today it said its British subsidiary, Coats Group, would appeal a 30 million euro ($56m) fine imposed this week by European Union regulators for price fixing.

Ports of Auckland fell 5c to 670. It said today the volume of containers it handled in September was adversely effected by watersiders striking for four days that month.

Electricity company TrustPower was unchanged at 485 after today posting am improved September half net profit after tax of $40.1 million.

Toll NZ was 5c higher at 270 after announcing a 13-year transport deal that will allow Solid Energy to move up to 3.8 million tonnes of West Coast coal a year from 2007/08.

Pay television operator Sky TV ended 3c higher at 553 after saying it had struck a deal with Telecom to offer an online DVD movie rental service, to be known as DVD Unlimited.

Other stocks to move today included: Air NZ down 2c to 155, Carter Holt Harvey up 3c to 214, Contact Energy up 4c to 600, Fisher & Paykel Appliances up 5c to 403, Fisher & Paykel Healthcare up 8c to 288, Mainfreight up 6c to 195, NZX up 17c to 747, Sky City up 6c to 447, Telstra up 6c to 505 and The Warehouse up 6c to 407.

- NZPA