NZ stocks: Telecom and Baycorp lead market recovery

Market heavyweight Telecom and credit services company Baycorp led a strong day's trading on the sharemarket yesterday.

The market's tone was better across the board, Geoff Brown of JP Morgan Chase said.

"You've seen some improvement in some of the electricity companies and the market seems to have treated positively the selling by NGC [Natural Gas Corporation] of its retail customer base ... which was another major contributor to the index move."

The NZSE-40 capital index closed up 23.66 points at 2075.46, with Telecom accounting for around half of that gain, Mr Brown said.

Telecom closed up 12c at $5.27, following on from a good performance on Tuesday. Brokers said a strong night on Wall St had also helped it along.

The telco topped turnover figures with 3.08 million shares worth $16.17 million changing hands. Total market turnover was 23.65 million shares worth $61.4 million.

Carter Holt Harvey also put on a strong show, rising 2c to $1.86 on turnover of 3 million shares worth $5.7 million.

Natural Gas was third in the turnover stakes with 1.96 million shares worth $1.96 million changing hands. Its share price rose 11c to $1.03, indicating that investors approved of its decision to cut its losses in the retail electricity industry and move on.

But one of the big successes yesterday was Baycorp, which took a 90c hit this week after news that its merger plans with Australian counterpart Data Advantage could falter.

Its share price made up for most of those losses yesterday, rising 71c to $12.20. Mr Brown said that could be seen as a signal to Baycorp directors about the terms set out by Data Advantage for a merger.

"I think the market is of a view that maybe the terms of the offer might have to be improved," he said

Shareholders seemed to be saying Data Advantage's terms had undervalued Baycorp, and were pushing up the share price accordingly, he said.

Baycorp directors will meet today to discuss the deal.

In other movements United Networks' price rose 8c to $8.80, Trustpower was up 10c to $3.50, Tower climbed 15c to $5.30 and Telstra rose 7c to $6.18.

Australasian brewer Lion Nathan fell 10c to $5.25, a possible reflection on its decision on Wednesday night not to proceed with its partial offer for winemaker Montana. The two-tiered deal received an adverse ruling from market regulators.

Sky City rose 10c to $11.40, its namesake Sky TV added 15c to $3.40, Contact Energy was up 2c at $3.29, Fisher & Paykel slipped 5c to $12.80 and Fletcher Building closed down 1c at $2.70.

In all there were 58 rises, 32 falls and 145 stocks traded.

* The dollar edged slowly higher yesterday, with dealers picking it could test the crucial resistance level of 41.50USc.

"The tone has been very positive," Bank of New Zealand currency strategist Stu Ritson said.

"The kiwi has remained in very narrow ranges - on the day [Thursday] we have traded a narrow 41.16USc to 41.30USc range - but certainly the tone has been positive, there is good demand on dips and looking forward we may look to test a little higher towards 41.50USc resistance in the offshore session."

At last night's close the kiwi was at 41.27USc from 41.17USc at Wednesday's close.

The kiwi was unfazed by local merchandise trade data yesterday showing a June month surplus of $110 million, leaving a June year deficit of $52 million. That dashed hopes the balance would return to the black for the first time since 1995.

- NZPA