NZ shares tumble early

The New Zealand sharemarket tumbled in early trading, following a broad sell-off in stocks in the United States after weak data on US new home sales heightened concerns about the pace of the economic recovery.

Among leading stocks, Fletcher Building fell 13c to $8.15, Contact Energy was down 8c to $6.15, while Telecom was unchanged on $2.55.

The benchmark NZX-50 index was down 24.99 points to 3177.79 around 10.15am, having ended up 10.3 points yesterday despite falls on offshore markets.

Investors were today taking into account Reserve Bank Governor Alan Bollard's decision to leave interest rates unchanged on 2.5 per cent.

He indicated the first hike could be earlier next year than previously expected, but still not until the second half of 2010 whereas the market had been pricing the first hike as early as January.

Bollard also appeared to be comfortable with the outlook for inflation, saying annual consumers price index inflation was expected to continue to track comfortably within the target range over the medium term.

His statement added to downward pressure on the New Zealand dollar, which has fallen from around US74.40c midday yesterday to US72c around 10am.

The few stocks rising early today included Fisher & Paykel Healthcare up 5c to $3.05 and Sky TV up 3c to $4.78.

Freightways was down 8c to $3.07 after reporting a decline in revenue of 5 per cent for the September quarter.

Trustpower fell 10c to $7.50, NZX was down 6c to $7.90, Mainfreight lost 5c to $5.38, Pike River Coal dropped 6c to $1.06, NZ Oil & Gas dropped 5c to $1.68, Air NZ dropped 4c to $1.30, Tower was down 4c to $1.69, and The Warehouse fell 4c to $4.51.

Dual-listed bank Westpac fell 75c to $32.45.

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In the US, financials, technology, materials and industrial sectors, which underpinned the market's advance from March, bore the brunt of the slide as investors reassessed their bets.

"The housing data definitely created an additional leg down in the market," said Mike O'Rourke, chief market strategist at institutional brokerage firm BTIG in New York. "A lot of people realise that we're correcting right now and are being cautious."

The Dow Jones industrial average dropped 1.2 per cent to 9762.69, the Standard & Poor's 500 Index fell 2 per cent to 1042.63, and the Nasdaq Composite Index slid 2.7 per cent to 2059.61.

- NZPA