NZ Stocks: Telecom soft, FCL Energy loses steam

Fletcher Energy ended 1c weaker at 775 on the local sharemarket yesterday, after rising as high as 795 after oil company Shell applied to take over the letter stock.

Fletcher Challenge said Shell's application to the Commerce Commission did not necessarily mean Energy had been sold to Shell.

The application should be seen as a "preliminary step in a long process," said Fletcher chief executive Michael Andrews.

There was heavy interest in Energy after the Shell announcement, with $14.7 million worth of shares traded. The stock has climbed from just over $4 in February.

ABN Amro Equities institutional sales head Nigel Scott said the market had been expecting Shell to make a bid for Energy because of the two companies' involvement with projects such as the Pohokura prospect.

"As we get closer to the [announcement about Energy's future] people are getting more wary about which way they see things heading."

Mr Scott said the bidding price for Energy would depend on a number of factors, including what the company did with its investment in Capstone.

"I don't think the story has changed much since last week. We're still a week away from finding out what the Fletcher Challenge group will do.

"Fletcher Challenge is pretty good about keeping a lid on information."

The NZSE-40 Capital Index as a whole ended weaker, closing down 18.16 points (0.85 per cent) at 2106.97, but the NZSE SCI Capital Index of smaller stocks gained 5.32 (0.1 per cent) to 5494.52.

Turnover totalled $125 million, with falls outnumbering rises 56 to 41 among the 155 stocks traded.

Credit Suisse First Boston dealer David Price said yesterday was a "typical Monday" on the sharemarket, with trading relatively quiet.

Telecom was 9c softer at 696 on turnover of 5.8 million shares worth $40.6 million, but Mr Price said this was in line with the general weakness in offshore telcos. The company's decision to slash its dividend from next year was also a factor in the share price's fall, he said. Telecom shares have dropped 8 per cent from 755 since the company announced its new dividend policy. They were trading as high as 980 in April.

INL - which last week posted a $34.6 million annual profit - came off 15c to 400. Mr Price said the stock had been a strong performer recently.

Carter Holt was down 2c to 183 and The Warehouse fell 3c to 605. Tower, Fisher & Paykel and Auckland Airport all lost 5c to 540, 735 and 290 respectively.

Lion Nathan was 11c lower at 455. Mr Price said the company was coming off the New Zealand section of the Morgan Stanley Capital Index and was not re-listing on the Australian side, which could account for its fall.

Both Air NZ stocks lost 3c, the A shares to 181 and Bs to 232. Meanwhile, Advantage and Bendon both rose 3c to 290 and 191 respectively. Frucor gained 4c to 240 and GDC rallied 10c to 485. Rocom continued its strong run on the New Capital Market since listing last week, closing up 23c at 110c.

- NZPA