NZ stocks: Tower prices still down

12.00pm

Share prices for troubled financial services company Tower crumbled in an otherwise lacklustre morning on the sharemarket today.

Tower announced it would report a half-year loss of $180 million and a $200 million capital raising, prompting its share price to fall 82c to 139, a drop of 37.1 per cent, at 11.39am.

MacQuarie Equities broker David Cleal said he expected Tower's share price to remain in the 130-150c bracket throughout the day.

"They've had a $180 million write off which effectively has lowered the NTA (net tangible assets) so the share price has taken a hammering as a consequence, he told NZPA.

"They are going to have a rights issue which will put further pressure on the share price.

"It's quite a substantial issue," he said.

The NZ50 gross benchmark index fell 2.16 points to 2007.45 at 11.39am while the NZSE-40 capital index had fallen 1.44 points to 1980.71.

Telecom turnover represented $7.1 million of the $21.6 million turnover so far today. It bolstered the market with a 6c rise to 496.

Only $2.4 million worth of Tower shares traded. The company also announcing it expected a half-year operating profit of $3-6 million.

It said it intended to cut the carrying value of certain assets by $190 million including amortising $135 million of excess market value as a result of changes to accounting standards.

Also today, Fisher and Paykel Healthcare's shares jumped 20c to 1070, having shed that amount yesterday. The company is due to report its half-year result tomorrow.

Mr Cleal said the rise of the New Zealand dollar was a concern for Healthcare investors.

"They (Healthcare) have got hedging in place but it is likely to keep a bit of a damper on the share price going forward.

"The issue both (Fisher and Paykel) Appliances and Healthcare is the roll out of new products and the commercialisation of those products.

"Both stocks are doing extremely well in that area," he said.

Here, there were 28 rises and 35 falls in the 108 stocks traded. Among the stocks that gained this morning was Tranz Rail, up 2c to 96.

Mr Cleal said there were a number of parties clamouring around the beleaguered rail operator, but it "remains to be seen whether there's a counter bid to the Rail America bid from Toll".

The surge in Tranz Rail's share prices came after Australian transport group Toll Holdings disclosed it has built a 6.1 per cent stake in the troubled rail operator and is mulling a full bid.

That raised the prospect that it may look to trump Florida-based RailAmerica's 75c-a-share, $158 million proposed bid, which is seen as too low.

In the United States, the Dow Jones industrial average fell 2.03 points to 8,491.36. The broad Standard & Poor's 500 Index declined 1.04 points, or 0.11 per cent, at 919.73. The tech-laced Nasdaq Composite Index lost 1.68 points, or 0.11 per cent, at 1,491.09.

- NZPA