NZ stocks: Index tops 2000 on back of Energy deal

The sharemarket topped the 2000 mark yesterday on news that the Commerce Commission had approved a second application by Royal Dutch Shell to buy Fletcher Energy.

Fletcher Energy shares soared 80c early in the day, ending up 72c at $9.22.

"She's all go for young and old in the Energy camp," said Cavill White Securities broker Dr Don Turkington.

The NZSE-40 closed up 14.62 points at 2009.55, on strong turnover of 48 million shares worth $188 million. The small companies index was up 31.96 points at 5178.20.

Cavill White put a value of $10.20 on the Energy bid. The shares were likely to trade at a discount to the $10.50 put on the bid by Fletcher Challenge.

Dr Turkington said the discount was likely because of the bid's sensitivity to the US dollar and the price of Fletcher Challenge's US asset, Capstone Turbines.

Energy's price could well go higher, particularly when US arbitrage experts looked at it later, Dr Turkington said.

Dealers said it might take a while to see a flow-on for the rest of the market, however, with investors still cautious after weeks of light trade.

"I think it will take a couple of days while people decide which way they want to move," James Lock of Craig and Co said.

"I think it will roll out, but investors have been pretty cautious lately and I think for some of them the Fletcher deal and the response to Energy was much needed."

Mr Lock said he expected the flow-on effects of the Fletcher decision to continue over the next couple of weeks as investors took stock and reassessed the implications of the sale.

The commission's announcement failed to add much value to the rest of the market. Telecom rose to 600 but fell back to $5.80, down 2c.

Fletcher Energy's success also failed to rub off on its fellow Fletcher stocks with Building coming off its recent $2 highs to end the day down 4c at $1.96. Fletcher Forests rights traded up 0.6c at 2.8.

Shares to gain were Tranz Rail, up 10c at $3.65, Montana, up 5c at $3.45 and Ports of Auckland, up 6c at 425.

Market newcomer Cadmus Technology ended its first day of trading down 2c at 18c while South Eastern Utilities rose 10c to $1.03 after Pyne Gould said it would bid $1.07 a share for the half of the company it did not already own.

- NZPA