NZ stocks: Market opens lower on rate hike

The New Zealand sharemarket eased a fraction in early trading today after Reserve Bank Governor Alan Bollard hiked official interest rates by 25 basis points to 7 per cent.

The benchmark NZSX-50 index was 5.26 points lower by 3288.96 by 10.15am.

Dr Bollard is attempting to put a lid on rampant household spending, buoyed by high house prices, which pushed inflation to 3.4 per cent in the year to September.

He signalled today's rise may not be the last, with further hikes possible if it doesn't have the desired effect of dampening spending.

"Borrowers and lenders alike need to recognise that the current rate of debt accumulation is unsustainable," Dr Bollard said.

"Today's increase in the OCR, combined with higher world interest rates and pipeline effects from the repricing of fixed rate mortgages, are expected to slow the housing market and household spending over the coming months."

Among the leading stocks, Fletcher Building -- which depends on a solid housing sector for business, eased a cent to 787, top stock Telecom was 4c lower to 586, Fisher & Paykel Appliances lost 4c to 324, and Contact Energy gained 3c to 687.

Freightways rose 10c to 307 after announcing its first quarter net profit was up 21 per cent on a year ago.

Carter Holt Harvey, which yesterday revised down its full year earnings forecast to $200 million, was steady at 251.

- NZPA