KEY POINTS:
The sharemarket has firmed today,after yesterday taking its biggest tumble of 2008 amid renewed concerns in world credit markets.
The benchmark NZSX-50 index, which yesterday lost 84.172 points or 2.3 per cent, is now at 3563, up 23.7 points or 0.6 per cent.
The previous worst daily fall was a 2.08 per cent fall on March 17 after the collapse of US investment bank Bear Stearns.
On Wall Street overnight, US stock markets lost ground after earlier gains as renewed jitters about the banking and finance sector dented investor optimism, traders said.
Here, market leader Telecom was up 1c to 383 following its 20c fall yesterday.
Contact Energy was up 5c to 920 after a 33c retreat yesterday and a 37c rise on Monday. Contact's parent Origin has spurned a takeover offer from BG Group and investors are waiting to see if there are any developments.
No 3 stock Fletcher Building, down 30c yesterday, was up 4c to 774.
Sky City continued its southward journey, losing another 3c to 370.
On the positive side, Fisher & Paykel Healthcare was up 5c to 236 while Property for Industry was up 4c to 125 and Auckland Airport was up 2c to 218.
On the retail front, Hallenstein Glasson was down 7c to 320 while Smith's City was up 2c to 44c.
In the US, the Dow Jones Industrial Average lost 100.97 points (0.81 per cent) to 12,402.85 and the Nasdaq slumped 11.05 points (0.44 per cent) to 2480.48 at the closing bell.
The broad-market Standard & Poor's 500 index shed 8.02 points (0.58 per cent) to a preliminary close of 1377.65.
Local dealers said much of yesterday's losses were the unwinding of unjustifiable gains late last week. An institutional dealer said the local market had made ground last week as large index funds matched the reweighting of local stocks on the global MSCI index.
US stocks fell after media reports suggested the investment bank Lehman Brothers may seek to raise fresh capital to shore up its balance sheet. Lehman's shares dived 10 per cent to close at US$30.61.
A Lehman Brothers spokesman declined to comment on the reports, but a statement released by the bank said it was sitting on ample liquidity of over US$40 billion (A$42 billion).
Stocks fell as separate market rumours suggested Lehman had borrowed funds from the Federal Reserve through a special lending facility.
"We did not access the primary dealer facility (a Fed lending window) today; the last time we accessed the facility was on April 16 for testing purposes. We ended the first quarter with liquidity of 34 billion dollars and finished the second quarter well above 40 billion dollars," Lehman Brothers Treasurer Paolo Tonucci said in a short statement.
Some analysts said Lehman, like many of its rivals, is vying to weather a widespread credit crunch which was in part unleashed by the US housing slump.
"Lehman Brothers is expected to report its first quarterly loss as a public company when it reports earnings the week of June 16," analysts at Briefing.com said in a market snapshot.
Other banks such as Citigroup and Merrill Lynch, which have sustained multi-billion dollar losses tied to mortgage securities, have received capital injections to help shore up their stressed finances.
Traders said a series of depressed sales report from big US auto manufacturers had also weighed down the market as the economy struggles for momentum and as high petrol prices buffet consumers.
General Motors said its May sales slumped a hefty 28 per cent compared with the same month a year earlier while Ford said its US sales declined 16 per cent amid a continuing sharp drop in demand for petrol-guzzling trucks and sport utility vehicles.
GM predicted that the era of the petrol guzzlers is ending as it announced plans to close four North American truck plants and ramp up production of new fuel-efficient vehicles.
"These moves are all in response to the rapid rise in oil prices and the resulting changes in the US, changes that we believe are more structural than cyclical," said GM chairman and chief executive Rick Wagoner.
GM's stock ended up 0.8 per cent at US$17.58 while Ford's stock finished 0.6 per cent higher at US$6.68 despite wider market losses.
On the economic front, Federal Reserve chairman Ben Bernanke said the central bank was "attentive" to the ailing dollar and would look at ways "to guard against risks" to inflation from a weak economy.
The dollar strengthened in the wake of Bernanke's comments and analysts said his remarks lessened the likelihood of further interest rate cuts anytime soon.
- NZPA, ADAM BENNETT
