NZ stocks: Lion Nathan the standout on wine deal

The New Zealand sharemarket closed more than half a per cent down in quiet trade yesterday, with brewer Lion Nathan the only standout among the leaders.

The NZSE-40 capital index dropped 17.06 points to 2088.40, although smaller stocks provided some life. Total market turnover was worth $78.00 million.

Craig and Co's Matt Willis said Lion Nathan, up 15c at 490, probably benefited from hopes its quarter-owned Montana would get Commerce Commission clearance to buy its main competition in the wine market, DB's Corbans. After the market closed that clearance was given, so Lion and Montana may gain further today.

Montana ended up 2c at 267 and DB gained 5c to 325.

"I think you're going to see some strength in Montana tomorrow, no two ways about it, and strategically it's obviously of huge benefit to Lion Nathan," Mr Willis said. The purchase would give Montana a large slice of the domestic market and strengthen its supply network for exports.

Telecom was down 11c at 640 - "extremely cheap" said Mr Willis. He said sellers were concerned about a short term earnings squeeze as the company poured resources into expanding in Australia.

The stock needed renewed institutional interest to establish a rising trend, which was simply a matter of time, Mr Willis said.

Fletcher Energy fell 11c to 865. Mr Willis said people were waiting for September 18, when the Commerce Commission is due to rule on Shell's application for clearance to buy Energy.

After that, it was generally expected that the Fletcher board would give some definitive direction regarding the future ownership of the three divisions.

Frucor continued its climb towards new highs, adding 6c to 240. Air NZ domestic A shares rose a cent to 194 and the Bs, which foreigners can own, were up 2c to 280. Brierley Investments - before its annual result today - lost 1c to 40.

Outside the top dozen, Ebos fell 25c to 305, Hellaby lost 8c to 170 and Metlifecare rose 2c to 117.

- NZPA