Key Points:

A strong rise in No 2 stock Contact Energy outweighed a disappointing Telecom, leaving the sharemarket virtually unchanged.

The benchmark NZSX-50 index closed up 1.98 points at 3376.39, in contrast to yesterday's 38-point gain after the US government's bailout of mortgage finance giants Fannie Mae and Freddie Mac.

However, with its limited offering of financial listings, the New Zealand stock exchange has shown less excitement about the bailout than many overseas bourses, with declines in Asia of 2 per cent or more today following gains of at least 3 per cent yesterday.

"It was disappointing compared with what happened overnight, but pretty much the euphoria happened yesterday," said David Price of Forsyth Barr.

"Telecom's balancing against some of the more positive performances."

Contact Energy jumped 3.3 per cent, or 29c, to a three-month high of 900 on speculation that majority owner Origin Energy may increase its stake with the planned takeover by BG Group now unlikely to proceed.

BG Group's A$13.8 billion ($17 billion) takeover bid for Origin Energy appeared scuttled by Origin's A$9.6 billion joint venture with ConocoPhillips.

Telecom was down 8c at 307, just above a new 15-year low of 306 hit earlier in the session.

"I think people got quite a shock at the result release in terms of the big increase in depreciation, and I think people are thinking worst case scenario in terms of cost on its mobile network - they haven't even said what it's going to be," Mr Price said.

Elsewhere on the top-10, Fletcher Building was up 6c at 775, Fisher & Paykel Appliances rose 8c to 186, F&P Healthcare was flat at 318, Sky City fell 8c to 377, and Sky TV gained 2c to 476.

Rural services company PGG Wrightson fell 5c to 250 after news yesterday it would take a half-share in the nation's biggest meat company, Silver Fern Farms.

NZ Refining lost 30c to 665, Vector was down 3c at 224, Pike River Coal fell 4c to 185, NZ Oil and Gas lost 2c to 155, and Air New Zealand fell a cent to 114.

On the rise, Steel & Tube was up 4c at 377, Infratil gained 3c to 220, NZX was up 8c at 698, and Freightways rose 5c to 350.

ANZ fell 27c to 2145, Westpac lost 77c to 2920, AMP fell 12c to 888 and Lion Nathan was down 5c at 1055.

Australian S&P/ASX200 was down 1.7 per cent after yesterday's 3.9 per cent gain, and the Nikkei share average fell 1.8 per cent after a 3.4 per cent jump.

Earlier, US stocks rose as investors bet Washington's bailout of mortgage finance giants Fannie Mae and Freddie Mac would stabilise the US housing sector and calm jittery world financial markets.

- NZPA