KEY POINTS:
The New Zealand sharemarket staged a relief rally today as the US Federal Reserve moved to bail out insurer American International Group.
The benchmark NZSX-50 index ended up 42.626 points, or 1.321 per cent, at 3269.93. The market plunged 2.79 per cent yesterday after Lehman Brothers filed for bankruptcy protection and Merrill Lynch was forced to accept a takeover by Bank of America Corp.
Overnight the US stock market rose, putting behind it the worst day since markets reopened after the September 11 attacks in 2001.
Brokers here said their day was quiet at times and clients continue to assess the extent of the global financial crisis and whether there are lessons in history about how to react to it.
"Basically none of us have any idea how this is going to play out," said Westpac chief economist Brendan O'Donovan on Radio New Zealand.
There were 49 rises and 48 falls in a market in which $193.8 billion worth of shares traded.
Stephen Wright at ASB Securities said the market had had a reasonable "go" today and the strength was more or less across the board.
The retail sector was one spot of weakness.
Pumpkin Patch eased 4c to 145 after reporting a 27.5 per cent decline in full year net profit. Michael Hill was down 4c at 78 and Hallenstein Glassons was down 7c at 279. Restaurant Brands rose 3c to 67.
Mr Wright said the financial position of New Zealand companies had not changed dramatically and neither had their dividend plans.
Telecom rose 1c to 281.
Air New Zealand was up 5c to 109, while Sky City was up 13c to 370.
Fletcher Building rose 20c early to 727, with Contact Energy rose 6c to 876.
Tower eased 4c to 194 and Rakon eased 5c to 263.
The Australian market rallied on the AIG bailout but then gave up ground as caution returned and the position of investment bank Macquarie was debated. Asian markets were mixed.
The Fed will provide AIG, once the largest insurer in the world, a bridge loan of US$85 ($130.8) billion and take an 80 per cent stake in the ailing company.
The Fed also today held its key benchmark US interest rate steady, opting to soothe financial markets with central bank lending facilities rather than rate cuts.
The Dow Jones industrial average ended up 1.3 per cent, to 11,059.02, while the Standard & Poor's 500 Index gained 1.75 per cent to 1213.60. The Nasdaq Composite Index was up 1.28 per cent at 2207.90.
- NZPA
