NZ stocks: Telecom boosts market, Tranz Rail in mild rebound

12.00pm

The New Zealand sharemarket today built on yesterday's 1.5 per cent gain but trading was quiet.

Progress in the Iraq war continues to dominate sentiment although the US market, after staging an early euphoric rally, ended only mildly up as investors turned their attention back to the spluttering US economy.

The NZ50 gross index was 6.24 points higher at 1981.83 at 11.45am while the NZSE capital index was up 6.97 points to 1946.97.

JB Were broker Murray Rutherford said Telecom continued to be the key to the local market. It was up 2c to 470 and completely dominated turnover at $20.2 million of the total market turnover of $38.5 million.

Tranz Rail rebounded at one stage rebounded 8c, or nine per cent to 84c today as investors assessed that its 21 per cent pummelling yesterday was overdone. But the selling then resumed and it dropped back to 78c, just 1c up on yesterday

The company was this morning holding a briefing for analysts and brokers said the outcome of that could be important for the future of the debt-laden company. Credit rating company Standard and Poor's is today or tomorrow expected to downgrade the company's credit rating by one or two notches.

Mr Rutherford said Telecom had put in a sterling performance over the past three weeks since it had climbed from $4.20.

Driving the stock was its strong cash flow and the growing expectation that it would soon be paying higher dividends.

"It pretty much hasn't faltered on the way up," Mr Rutherford said. "I don't think the regulatory environment will be too onerous and it has been identified as a company with very, very strong cash flows."

Restaurant Brands gained 4c to 139 after it annouced an improvement in the second half despite posting a 48 per cent fall in annual net profit to $11.1 million.

Scott Technology jumped 18 cent to 260 after it announced yesterday a 270 per cent profit increase for the six months to February of $2.49 million.

The company's group sales were up by 132 per cent to $23.3 million and its directors announced an interim dividend of 6c per share, double last year's dividend and higher than earlier predictions.

Auckland Airport retreated 6c to 514 after a strong performance yesterday.

DB Breweries spurted 15c ahead to 620 on very slim volume.

Sky City Entertainment, under pressure last month because of proposed anti-smoking legislation, recovered 25c to 270.

Retail stocks were firm after stronger than expected national retail sales for February. Briscoe was up 4c to 189, Hallenstein Glassons up 3c to 288, Michael Hill up 5c to 420 and The Warehouse up 1c to 548.

There 52 rises and 17 falls among the 104 stocks traded.

- NZPA