Sharemarket rising after OCR

The New Zealand sharemarket held its gains from early trade after Reserve Bank Governor Alan Bollard left the official cash rate (OCR) unchanged, and improved on them in the afternoon instead of tailing off.

Dr Bollard stuck to his guns on holding the OCR at or below current levels until late in 2010 and highlighted the fragility of the "patchy" recovery.

He had particular concerns about the New Zealand dollar exchange rates - which briefly moved above US70c overnight - and warned that a return by NZ investors to their addiction to real estate could undermine improvements in household savings.

But the head of institutional equities at First NZ Capital, James Lee, of Auckland, said commentators had "overplayed" the importance of the Reserve Bank statement in terms of equity markets.

"How many time have we gone into a RBNZ statement expecting them to say 'unchanged' and funnily enough, that's what they say.

"I think it's an over-played, over emphasised and certainly an over-analysed series (of data)," he said.

Mr Lee said the impact on share prices of the high exchange rates on the NZ dollar - which can make life less profitable for exporters - had so far been minor.

Most people were looking through the short-term currency movements and looking at underlying growth.

"Three months ago the currency was in the US50c (range) - in three months time it will be something different again; people in the equity markets are trying to ignore the short-term noise caused by currency."

He noted this was happening with Fisher and Paykel Health, which has a big exposure to exchange rates, but still rose 5c today to 340.

The benchmark NZSX-50 index quickly rose 7.73 on opening, after losing 5.1 points yesterday, then went on to gain a total of 10.273 points - lift of 0.33 per cent - over the whole day's trading.

Volume was only 40.06 million shares with the turnover valued at $130m.

Mr Lee said it had been a "reasonably quiet" week and today showed no real difference: "NZ hasn't followed the global leads".

Across the Tasman, the benchmark S&P/ASX 200 index gained 48.6 points to 4570.8, its highest close since October 7, 2008, as hopes of an economic recovery boosted retailers such as David Jones Ltd while energy stocks were lifted by stronger oil prices.

In NZ, Telecom was up 2c early and finished at 272, Fletcher Building lost some of the past week's gains to finish down 6c at 796, and Contact Energy rose 5c to 607.

Other stocks to rise included AMP, up 10c to 790, Rubicon, up 5c to 115, Sky City up 7c to 326, Xero up 4c to 136, Methven up 1c to 159 and Mainfreight up 5c to 495.

Falls included Sanford, down 1c to 506, and Cavalier Corporation, down 2c to 248, Lion Nathan, down 3c to 1467, and TrustPower which fell another 3c after announcing it was dropping its planned South Australian windfarm.

In the United States, stocks closed higher for a fourth straight day as industrial and technology companies gained from a weak US dollar.

The Dow Jones industrial average was up 0.5 per cent at 9547.22, the Standard & Poor's 500 Index gained 0.8 per cent at 1033.37, and the Nasdaq Composite Index rose 1.1 per cent at 2060.39.

The close for the S&P index was the highest since October 6.

Nasdaq's advance was limited by Apple Inc, which fell 1 per cent to US$171.14. Chief executive Steve Jobs appeared at a company event after recovering from a liver transplant, and some analysts remarked on how thin the 54-year-old chief executive looked.

- NZPA