New Zealand share prices ended weaker on light volume as investors grew pensive about the prospects of inflation and rising bond yields here and around the world.
The S&P/NZX50 index finished at 12,564.21, down 75.85 points, or 0.6 per cent, on volume of 55.64 million shares, worth $201.98 million.
There were 96 falls and 51 rises.
Most of the big name stocks were weaker as concerns about US inflation took hold after US year treasury yields gained for the third day in a row. Local 10-year bond yields were at 1.81 per cent, the upper end of their recent 1.6 to 1.9 per cent band.
"It's a headwind for some of our utilities that are priced to bond yields," Shane Solly, portfolio manager at Harbour Asset Management said.
"Investors globally are pensive," he said.
"We are at this point where we have seen a recovery in activity, particularly in the US," Solly said.
"There is a game of chicken going on between the capital markets and the central banks.
"Capital markets are working on the basis that activity is better than central banks thought it would be and therefore bond yields need to be higher," he said.
"US longer-term bond yields have crept up again and that has made people step back.
"In our market, Fisher and Paykel, Fletcher Building , EBOS - the more liquid stocks - were sold off."
Many of New Zealand's stocks are interest-rate sensitive - the utilities and some of the growth stocks.
On that score Contact Energy fell four cents or 0.5 per cent to $7.61, Chorus dropped 16c or 2.4 per cent, to $6.35 and EBOS fell 84c, 2.7 per cent, to $30.16.
Construction firm Fletcher Building fell 15c or 2 per cent to $7.25 while market leader Fisher and Paykel Healthcare lost 50c or 1.5 per cent to finish at $33.30. Port of Tauranga closed 13c or 1.7 per cent down at $7.40.
Running against the trend was retirement village company Ryman, which closed 50c or 3.4 per cent up at $14.95.
Solly said Ryman firmed on optimism that the company, which has assets in Australia, may benefit from the increase in aged-care funding outlined in this week's Aussie budget.
Former high flier A2 Milk ended at $6.20 up 1c after remaining in the influential MSCI index.
The alternative milk company's shares have languished in recent months after peaking at $21.50 last August as its profitability became increasingly challenged, giving rise to speculation that it may be removed from the index.
Monday's earnings downgrade, which brokers estimate will take a2 Milk's net profit for the June year down to about $97m from last year's profit of $385.8m, overshadowed any concerns about possible changes to the MSCI index.
The Fonterra Shareholders Fund units and the farmer-only shares went their separate ways.
The units closed 13c or 3.43 per cent higher at $4.11 while the farmer-only shares finished steady at $4.04 after dipping to $3.80.
Solly said the two had different investor bases and there was a relative lack of liquidity in the units.
Fonterra last week outlined proposals on its capital structure. Among them is closing the fund or capping it.
Pushpay ended 3c stronger at $1.64 after reporting a $31.2m net profit - up 95 per cent on the previous year's.
Shares in Napier Port dropped by 12c or 3.4 per cent to $3.40 after the stock dropped out of the MSCI small-cap index.