NZ Shares: Market starts well but soon eases

The New Zealand sharemarket started with a sense of purpose but its gains quickly eased in early trading.

The initial spring in the market's step came after gains in United States equities sent the S&P 500 to its best month since October 2002.

The market in this country also opened strongly after Reserve Bank Governor Alan Bollard took the unusual step of issuing a statement expressing his concern at a recent rise in long term wholesale interest rates.

If the apparent distortion persisted, it could put unnecessary pressure on the cost of borrowing by firms and households, he said today. He also repeated indications that the Reserve Bank was projecting interest rates to remain at relatively low levels for an "extended period".

Following his statement the NZ dollar dropped about 1c against the greenback to around US56c.

Shares in Fletcher Building and Kiwi Income Property Trust were also on halt as both carried out book builds.

Fletcher, up 20c to $6.20 before the trading halt, said it was looking to raise between $465 million and $505 million in new equity. Kiwi Income is proposing to raise about $50m through an issue of new units.

The benchmark NZX-50 index was up 6.1 points in early trading to 2596.49, after a more promising start that saw it up 27.6 points soon after opening.

Sanford was up 5c to $5.70, Michael Hill International up 3c to 48, Restaurant Brands up 2c to 83, Telecom up 2c to $2.30, Tourism Holdings up 2c to 44, and Tower up 2c to $1.31.

Dual-listed Australian banking shares made good gains with ANZ adding 45c to $19.50 and Westpac up 16c to $23.56.

Contact Energy was down 2c to $5.70.

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In the US, stocks climbed as investors snapped up top-performing bank and technology shares as the first quarter came to an end.

Upbeat news from Europe set the tone for financials, helping them to recover much of the previous day's losses and continue a recent robust rally after British bank Barclays declined to take part in a government asset-protection plan.

The Dow Jones industrial average gained 1.2 per cent to 7608.92, the Standard & Poor's 500 Index added 1.3 per cent to 797.87, and the Nasdaq Composite Index climbed 1.8 per cent to 1528.59.

- NZPA