Strong start by NZ market peters out

New Zealand shares closed a touch weaker today despite some strong gains for smaller stocks, as investors turned cautious while global markets lurched.

The sharemarket had started strongly after agreement on a 750 billion euro ($1.5 trillion) sovereign debt rescue package from the European Union sparked big rises on markets.

However, the benchmark NZX-50 index closed down 3.6 points at 3167.02, having fallen nearly 150 points in three days from last Wednesday.

Yesterday it had picked up 11.8 points after European policy makers finalised their plan to restore confidence in financial markets.

"The New Zealand market's (closing) flat today and that's despite some pretty impressive upward moves overnight," said Grant Williamson of Hamilton Hindin Greene.

"I think investors are being rather cautious in the fact that volatility is so high at the moment with these very wild swings - long-term investors don't particularly like these sorts of movements so I think in the main are pretty much sitting on the sidelines."

Blue chips capped some strong gains made among the smaller stocks. Telecom was down a cent near historic lows at 210, Fletcher Building was down 4c at 791, Sky City lost 4c to 300, and Sky TV was down a cent at 480.

Auckland electricity network operator Vector rose 2c to 216 after issuing a nine-month operational summary pretty much in line with guidance.

PGG Wrightson rose 2c to 55 after receivers sold a parcel of 46.8 million shares to Craigs Investment Partners, who placed them to investors at 52c per share.

"It was always going to be at a small discount to the traded price at the time, but in the medium term it should bode well for the share price to slowly improve now that the overhang has been removed," Mr Williamson said.

"There may be some short-term selling pressure as the people who did pick up that parcel make some short-term profits as the price is a little bit better than that 52c."

The shares were among the assets of Rural Portfolio Capital (RPC) and Rural Portfolio Investments (RPI), companies associated with businessman Craig Norgate.

Seafood exporter Sanford rose 12c to 432, Trustpower was up 10c at 730, Ryman gained 4c to 212, and Mainfreight was up 4c at 636.

Across the Tasman, Australia's S&P/ASX200 Index was down 0.9 per cent at 4558.6 ahead of the release of the government's budget tonight.

Earlier in the United States, all three indexes achieved their strongest gains since March 2009. Overnight, European shares posted their biggest daily rise in more than 17 months.

- NZPA