Power companies lead decline

Fonterra Shareholders' Fund fell 0.2 per cent to $4.91.

Investors cautious amid talk electricity prices are too high.

New Zealand shares fell as traders weighed whether a regulatory threat was returning to the energy sector. Mighty River Power, Genesis Energy, Meridian Energy and Contact Energy declined. A2 Milk Company fell as investors looked to crystallise recent gains.

The S&P/NZX 50 Index fell 42.19 points, or 0.7 per cent, to 5733.29. Within the index, 27 stocks fell, 15 rose and eight were unchanged. Turnover was $196 million.

At the weekend, Labour MP Stuart Nash told TVNZ's Q+A programme he was reviewing, but had not abandoned, the party's controversial plan to further regulate the energy sector in a bid to bring down retail power prices. Electricity company shares fell as investors considered the possibility of future regulation.

Meridian dropped 4.7 per cent to $2.05. Mighty River fell 3.8 per cent to $2.55. Genesis declined 4.1 per cent to $1.755. Contact slipped 3.7 per cent to $4.95.

"One or two politicians are saying New Zealand electricity prices are too high, so that might be starting to have a bit of effect on investors," said Grant Williamson, director at Hamilton Hindin Greene.

A2 Milk Co fell 5.3 per cent to 71c, after advancing to a year high on the back of a possible takeover bid by Freedom Foods, which already has a 19 per cent interest in the milk marketing company. "We've still got to wait for more detail around that and there's no offer on the table at this stage so it is pretty early days," Williamson said.

Vital Healthcare rose 0.3 per cent to $1.64. The hospital developer has announced a A$14.5 million project for its South Eastern Private Hospital in Melbourne and is expanding its land base in Newcastle.

Precinct Properties gained 0.4 per cent to $1.145. It sold another property in Wellington's central business district for $76 million.

Units in Fonterra Shareholders' Fund fell 0.2 per cent to $4.91. The world's largest milk exporter had twice as many farms offer to supply milk for a guaranteed price for the coming season than last season.