KEY POINTS:
A takeover proposal for Contact Energy's key shareholder sent a positive buzz through the sharemarket today, which was also revelling in a lower New Zealand dollar.
The NZSX-50 benchmark index closed up 19 points or half a per cent to 3625 on top of its 1 per cent drop yesterday. There were 55 falls to 50 rises on $131 million turnover.
The seemingly generous takeover proposal boosted the market.
Australia's Origin, which holds 51 per cent of Contact, has received a A$12.9 billion ($15.7 billion) takeover proposal from UK-based utility BG Group (British Gas).
The bid at A$14.70 per share is a near 40 per cent premium to the prevailing price.
Contact shares jumped 9 per cent or 77 cents, to a record 1015, on the prospect although they later retreated to 970 in volatile action. Trustpower was up 6 cents to 800.
ABN Amro Craigs broker Matt Willis said while implications for Contact, such as the possibility it would be taken over, were not immediately clear, the market would draw its own conclusions.
"Clearly it's of significance for Contact shareholders that the parent company is subject to a bid."
The bid price had valuation implications for the gas and energy sector; "the sector goes up in sympathy to some extent".
A potential big transaction pending, to some extent, boosted confidence after a quiet period for mergers and acquisitions.
Air New Zealand also had a good day, up 4 cents to 125 after it announced it was putting up domestic fares for the second time in six weeks due to record jet fuel prices.
Telecom and Sky City were up 8 and 9 cents to 378 and 400 respectively while Sky TV was down 10 cents to 445 and the Warehouse down 14 cents to 580.
Mr Willis said the weaker New Zealand dollar, driven by underlying bond rates falling, had positive implications for equity valuations and markets.
"Finally you are getting some relief on the New Zealand dollar and certainly the New Zealand market is a net beneficiary of a lower dollar than the other way around, given the majority of businesses do have an export interest or assets off shore."
Fletcher Building continued its slide down 9 cents to 857 a fter building consents data showed they tumbled by nearly a third last month compared to March 2007.
There was no reaction to news Fletcher Building was to buy an Australian Cairns-based business Morinda Australia Pty Ltd and the assets of All Steel Products Ltd.
Coal miner Pike River Coal climbed another 4 cents today to 146 on solid volume.
In Australia, shares eased 0.2 per cent in late afternoon trading as Origin shares jumped, offsetting losses in other resource firms on a drop in oil and metals prices.
Wall Street stocks ended little changed on Tuesday as setbacks for two drugs weighed down the pharmaceutical sector, offsetting the relief from a retreat in record high crude oil prices.
The Dow Jones industrial average was down 39.81 points, or 0.31 per cent, at 12,831.94. The Standard & Poor's 500 Index was down 5.43 points, or 0.39 per cent, at 1,390.94. The Nasdaq Composite Index was up 1.70 points, or 0.07 per cent, at 2,426.10.
- NZPA
