Telecom rebound drives stocks higher

Telecom headed into much friendlier waters yesterday, pulling the overall market to a strong close for the week.

Main news of the day - that Air New Zealand's chief, Jim McCrea, had quit suddenly - came as no surprise to the market but there were mixed views on why the airline's share price improved after the announcement.

Telecom, which had been falling for a week and was yesterday hit by a wave of overseas selling, glimpsed 740 yesterday before finishing up 35c, or 5 per cent at 735, to be down 10c over the past five trading days.

Overall it was a good day on the market, with turnover a high $161 million. Of that, Telecom accounted for $81 million but "half of that was done pre-market, carrying over from Thursday's big volume but nonetheless pretty healthy numbers," said Richard Leggat at Merrill Lynch.

"I think a lot of the selling in Telecom in the first part of the week was offshore institutions making asset allocation moves [at the start of the quarter] as opposed to anything that was caused by a specific Telecom event. On Thursday we saw the bulk of that selling absorbed," he said.

Air NZ A ordinaries gained 5c to 185 and its B shares 12c to 232 following the announcement on Mr McCrea.

"I don't think it was totally unexpected. I think there has been a little bit of friction between Jim McCrea, BIL and SIA," said Mr Leggat.

Jonty Edgar at Credit Suisse First Boston attributed the gain in Air NZ to a sector move which had seen Qantas firmer in Australia, rather than connected to the chief executive leaving.

The NZSE-40 capital index closed up 27.28 points, or 1.34 per cent, at 2067.91, with advancers outstripping retreaters by 66 to 24 among the 144 stocks traded.

AMP unwound some of its recent gains with a 103c slide to $22.02, INL was off 15 at 400, and Sky TV 5c to 395. Carter Holt Harvey was steady at 180.

Of the Fletcher stocks Energy was a standout with a 32c jump to 692 after its US investment, Capstone, rose.

Mr Leggat suggested that Energy had also been victim of some asset divestment by US players and a softer oil price.

Fletcher Forests added 1c to 79, while Building slid 6c to 229, and Paper 1c to 246.

Baycorp appeared to run into profit-taking after its "fantastic" run, ending down 55c at $11.45, Mr Edgar said.

"The Warehouse - up 10c at 555 - continues to be stronger. There have been a number of broker upgrades since their purchase in Australia."

Among the small cap stocks, Frucor was again a standout with an 8c rise to 181.

- NZPA