NZ stocks: Telecom leads market up by 1.25pc

11.41 am

A recovery by Telecom led the New Zealand sharemarket up by 1.25 per cent in morning business.

Telecom, which yesterday sank to $4.25, its lowest level in just under eight years, today recovered 11c to $4.37.

Turnover on the market was very quiet with just $14.3 million worth of shares traded. Telecom trade made up nearly half of the turnover.

Some traders believe Telecom and its Australian counterpart Telstra have good defensive qualities although yesterday's selling in Telecom may have been prompted by one broking house downgrading Telecom.

The NZSE-40 index was up 22.77 points to 1860.06 by 11.30am. Tranz Rail rose 10c to 440 after a deal was signed with the Government yesterday over the Auckland rail corridor.

Lion Nathan was up 5c to 600. It announced a $A7/share bid today for premium winemaker, Petaluma in a further push into wine after it was thwarted for control of Montana.

There will be plenty of interest to see if the US Federal Reserve cuts rates again overnight for the ninth time this year as it tries to stave off recession. Most analysts expect a half percentage point cut which would drop the Fed Funds rate to 2.5 per cent.

The Reserve Bank is expected to leave rates steady at its six weekly review of rates tomorrow following its surprise half percentage point cut earlier this month.

Brokers said rate cuts were largely factored in to equities.

"Markets have obviously had a negative shock and are really trying to assess where to position themselves for what look likes a global recession of some sort -- whether it be a short or a longer one," said Credit Suisse First Boston broker Phil Hardie Boys.

He said the worst of the negative shock may be over and the market was attempting to find a platform.

Other stocks to move included: Baycorp, down 5c to 1105, Cavalier, up 13c to 524, Fletcher Building, up 3c to 255, Independent News, up 5c to 300, Sky TV, up 5c to 315, and Lyttelton Port, down 6c to 166.

There were 41 rises and 23 falls among the 101 stocks traded.

- NZPA