NZ shares drop on Fletcher speculation

The market may be being cautious over Fletcher Building's earnings after Christchurch's latest series of earthquakes. File photo / Richard Robinson

New Zealand shares fell amid speculation Fletcher Building's earnings will be at the low end of estimates amid a weak housing market and delays in the rebuild of Christchurch. PGG Wrightson led decliners as commodity prices fell.

The NZX 50 Index fell 16.69, or 0.5 per cent, to 3219.83. Within the index, 23 stocks fell, 15 rose and 12 were unchanged. Turnover was $60 million.

Shares weakened across Asia today ahead of bond auctions from Spain and Italy, which will test market sentiment, and the European Central Bank's interest rate review. Australian shares were also weighed down by QBE Insurance, which shed 13 per cent after it warned 2011 profit fell as much as 50 per cent on record catastrophe claims.

AMP dropped 2.5 per cent to $5.46 on the NZX while New Zealand insurer Tower was unchanged at $1.51.

Fletcher fell 0.9 per cent to $5.81, near the 2 -year low of $5.80 reached two days ago. The swarm of earthquakes in Christchurch on Dec. 23 has stoked concern the rebuild won't get underway in earnest until mid-year. Fletcher has the mandate to oversee the work.

"It is highly likely the company will be at the bottom end of their guidance," said James Lee, head of institutional equities at First NZ Capital. "Whether or not that is already reflected in the stock price is a different matter.

"I think the market is still cautious and will remain that way until reporting season," he said.

Shares in Fisher & Paykel Healthcare fell 5.2 per cent to $2.20 as the kiwi dollar hit a fresh two-month high against the US dollar. The manufacturer of breathing masks and respirators sells more than half its stock in the US market.

Michael Hill International gained 2.3 per cent to 89 cents after the jewellery retail chain yesterday reported a 7.2 increase in first-half sales, even as profit margins in Australia, its biggest market, were squeezed by tepid demand across the ditch.

Shares in Genesis Research & Development were unchanged at 3.4 cents after the company announced it was a target for a reverse takeover by unlisted Australian medical research Mariposa Health.

National carrier Air New Zealand's stock declined 0.6 per cent to 88 cents after the airline's chief executive Rob Fyfe told the National Business Review its Hong Kong and Los Angeles long-haul routes are under review, with cuts to those flights a possibility.

Shares in listed property entities gained, with AMP NZ Office up 1.2 per cent to 85 cents, Argosy up 1.3 per cent to 79 cents and Vital Healthcare up 0.9 per cent to $1.14 after a Forsyth Barr report showed the NZX Property index outperformed the benchmark NZX 50 index by more than 11 per cent.

NZX rose 2.4 per cent to $2.56 amid optimism the re-emergence of major new listings will give a shot in the arm to its markets business. Chorus, the networks company spun off from Telecom, was among the new listings. It fell 1.3 per cent to $3.15 and is up from its listing price of $2.94.

"Chorus was a very beneficial IPO for them," First NZ capital's Lee said.