NZ stocks: Telecom, FCL Building lead 1pc surge

Telecom drove the sharemarket to a higher close as participants talked of alternatives to its hunt for Australia's expensive Cable and Wireless Optus.

Also featuring were Fletcher Building, up 7c at $2.18 - or 11 per cent for the year-to-date - and Frucor Beverages, which hopped 8c higher to 183.

The NZSE-40 capital index gained a full per cent, or 20.16 points, to 1928.41.

Turnover of 39.66 million shares was worth $94.70 million, Telecom accounting for $30.53 million.

There were 52 rises and 35 falls among the 139 stocks traded.

"We had a good continuation of the rally for the week," ABN Amro's Cameron Stewart said. "People are saying we are very cheap, the currency is getting stronger, and the US market is coming off so they have to put money elsewhere."

Mr Stewart said Telecom rose 21c to $5.08 as people talked of it dropping its attempt to buy Australia's third ranked telco, C & W Optus, in favour of pursuing other telcos in that country.

"It looks like they're not going to go for Optus - it looks like they're going to look for something else in Australia." Telecom has not commented.

Investors will be relieved if the immediate prospect of the big funding costs required to buy Optus has in fact receded.

Mr Stewart also said the main Telecom seller recently had completed its business so supply had dried up somewhat. Also yesterday, broker JB Were upgraded Telecom to a "buy."

Fletcher Building's recent gains have been on the back of a more promising interest rate outlook and the high yield it offers. Mr Stewart said new chief executive Alexander Toldte was also a factor.

Drinks company Frucor's rise was attributed to its announcement that sales were up in Australia since it took over direct selling of its flagship "V" energy drink in that market this week. Frucor will announce its revenue figures for the six months to December 2000 next week.

Among other stocks, Telstra gained 15c to $8.40, The Warehouse was up 4c at $5.96 and Tower rose 5c to $5.25. Sky TV lost 5c to $3.25, DB Group shed 3c to $5.12 and UnitedNetworks lost 15c to $7.75.

- NZPA