Share prices fall as foreign buyers go quiet leading into Reserve Bank rates update.

New Zealand shares fell as demand dried up ahead of a Reserve Bank update, with Meridian Energy and Vector hit hardest.

The S&P/NZX 50 Index dropped 70.38 points, or 1 per cent, to 6,795.72. Within the index, 35 stocks fell, eight were unchanged and six rose. Turnover was $181.9 million.

"Offshore markets have influenced investors locally ... and we appear to have a bit of profit-taking on stocks which have done pretty well," said Grant Williamson, director at Hamilton Hindin Greene.

"There was always going to be a correction at some stage, and whether this is the start of it is anyone's guess. At the same time, most things are still looking pretty healthy out there in the economy so I think demand will stay relatively high for New Zealand shares."


Williamson said yesterday had seen fewer foreign buyers, meaning the high prices those investors have been supporting over the past few weeks were not present, as the Reserve Bank's OCR update looms.

Meridian Energy, which has gained 12 per cent this year, shed 4.5 per cent to $2.53. It hit an all-time high of $2.735 last Wednesday.

"This is the third day down for them, they are coming off their highs but I think there was just strong demand for the shares a week ago which has dried up somewhat," Williamson said. "It really looks like the stocks that have risen the fastest have come in for a bit of profit taking. The sellers are back in control."

Vector declined 3.4 per cent to $3.40, Xero shed 2.9 per cent to $17, and Air New Zealand dropped 2.7 per cent to $2.705.

SkyCity Entertainment Group fell 2.6 per cent to $4.94 and Auckland International Airport dipped 2.2 per cent to $6.265. Rubber goods company Skellerup Holdings was the biggest gainer, up 1.4 per cent to $1.42, while Westpac Banking Group rose 1.1 per cent to $35.38 and retirement home builder and operator Ryman Healthcare advanced 0.5 per cent to $8.86.

Spark New Zealand edged up 0.3 per cent to $3.55. Its head of digital Tim Miles and ventures unit boss Rod Snodgrass will leave the country's biggest telecommunications company at the end of the year in an overhaul of its executive structure.

Under chief executive Simon Moutter's tenure, Spark has put more emphasis on data and mobile services, which are now both bigger than traditional voice services.

Outside the main board, Kirkcaldie & Stains was unchanged at $3.13. Veteran corporate raider Sir Ron Brierley has increased his takeover offer for Kirks after his earlier offer was rejected by the former retailer's board. Brierley lifted his offer to $3 a share from the $2.75 he offered in March and extended the closing date by a month to June 12, according to a statement to the NZX.

SeaDragon dropped 7.1 per cent to 1.3c. It missed its annual earnings guidance as a downturn in sales pushed down prices of Omega-2 oil and said the final cost of its Omega-3 refinery will be more than previously expected. It will publish its audited results next month, having previously forecast annual earnings of $144,000.