Market higher as investors eye Telecom's future

The New Zealand sharemarket managed a positive start to the week even though Telecom's confirmation that it is prepared to fully separate its business added further uncertainty to an already nervous market.

The benchmark NZX-50 index closed up 11.141 points, or 0.365 per cent, at 3061.224 after opening up around 26 points. Turnover was worth $98.3 million. There were 53 rises and 27 falls among the 103 stocks traded.

Telecom fell to a record low of 192 after saying it is fully investigating structural separation in order to participate in the Government's ultrafast broadband initiative. It ended down 3c at 196 but was technically up as from today shareholders are no longer eligible for a 6c a share dividend.

"It is ex-dividend today so it is actually firm today if we take the dividend adjustment into account," said Grant Williamson, director at Hamilton, Hindin Greene.

He said separation could be positive in the long term if it got the company on the right side of regulators.

GoldmanSachs JBWere's Peter Sigley said the proposition of complete separation was not a complete surprise for investors.

People were trying to think through myriad options for the company at the moment, with this being just one of them. Telecom was an incredibly confusing proposition for investors, he said.

As the market was closing Standard & Poor's changed the outlook on the company's credit rating to negative.

Otherwise risk appetite has rebounded slightly but markets remain vulnerable to developments in the sovereign debt story in Europe.

Among the leading shares, Fletcher Building was down 5c at 782 and Contact Energy jumped 2c to 597.

SkyCity fell 1c at 291 and Guinness Peat Group fell 1c at 77.

Hellaby rose 5c to 155, NZOG rose 5c to 141 and AMP rose 25c to 695. Rakon, which reported earnings last week, rose 2c to 99.

NZ Refining rose 5c to 338 and Steel & Tube rose 7c to 257.

The Warehouse rose 4c to 364 and Hallenstein Glassons rose 5c to 336. TrustPower rose 4c to 720 and SkyTV rose 3c to 467. Auckland Airport rose 1c to 189 and Mainfreight rose 3c to 604. Air NZ was unchanged at 120.

In the United States, stocks snapped a three-day losing streak on Friday as investors bought beaten-down shares on bets the financial regulation bill won't be as onerous as some had feared.

The Dow Jones industrial average gained 125.38 points, or 1.25 per cent, to 10,193.39. The Standard & Poor's 500 Index jumped 16.10 points, or 1.50 per cent, to 1087.69. The Nasdaq Composite Index rose 25.03 points, or 1.14 per cent, to 2229.04.

- NZPA