New Zealand shares dropped, dragged lower after Fletcher Building's first-half earnings disappointed, with A2 Milk Co and Sky Network Television also falling.

The S&P/NZX50 Index fell 53.22 points, or 0.7 per cent, to 7,062.47. Within the index, 32 stocks fell, 16 rose and two were unchanged. Turnover was $148.7 million.

Fletcher Building, the second biggest stock by market cap, led the index lower, down 5.2 per cent to $9.68. The company posted a 2 per cent gain in first-half profit to $176m.

A2 Milk Co dropped 4.5 per cent to $2.33. The milk marketer's chief executive and chair have sold down their stakes, less than a week after reporting first-half profit more than tripled.


"It's sent the market into a bit of a tailspin really, we've seen good volumes running through once news got out," said Peter McIntyre, investment adviser at Craigs Investment Partners. "They had a sound result, so whether the market has perceived this to be top of the market stuff - we've seen this historically with some companies as well when some CEOs or chairs sell their shares."

Sky Network Television fell 2.7 per cent to $4.35 and Spark New Zealand rose 0.6 per cent to $3.49. Spark and 2Degrees have been granted a stay on the proposed merger between rival Vodafone New Zealand and pay-TV operator Sky to consider their legal options. If the Commerce Commission clears the merger today, it won't come into effect immediately, giving the opposing parties time to read the reasoning behind the decision and decide whether they will pursue a legal challenge.

Separately, Sky posted a 32 per cent drop in first-half profit to $59.3m as content costs increased, and revenue and subscriber numbers fell.

Mercury New Zealand was the best performer, up 1.3 per cent to $3.09, and Metlifecare gained 0.9 per cent to $5.49.

Ebos Group advanced 0.5 per cent to $18.20. The pharmaceutical and animal health products maker's recent acquisitions helped it lift first-half profit 7.2 per cent to $68.8m and fatten its dividend to shareholders, while also bolstering the outlook for annual earnings to be at the upper end of a previous projection for growth of 7-to-10 per cent.

Meridian Energy rose 0.2 per cent to $2.67.

Outside the benchmark index, Tower jumped 16.7 per cent to $1.325. ASX-listed insurer Suncorp Group has built an 11 per cent stake in Tower and put forward a rival takeover offer for the NZX-listed general insurer.

The offer, worth a total $219.3m, trumps a $197m deal already on the table and backed by Tower's board and major shareholders Salt Funds Management and Accident Compensation Corp to sell to Canada's Fairfax Financial Holdings at $1.17 apiece.