NZ stocks: Market down 2pc as the Warehouse pummelled

The New Zealand sharemarket closed down more than 2 per cent in a soggy session which included a profit downgrade by discount retailer The Warehouse.

The benchmark NZ50 gross index closed down 2.20 per cent, or 43.99 points, at 1955.45 while the top-10 index lost 2.70 per cent to close at 874.95.

Moderate turnover of 37.93 million stocks, valued at $95.41 million, was topped by Telecom's $28.1 million.

Ken Allen of Direct Broking said some stocks were feeling the effects of money being channelled into the two current capitalisations, AMP and Promina.

Market leader Telecom closed down 8c at 464, casino operator Sky City was down 20c at 805, Fletcher Building shed 7c to 324, and, following its announcement yesterday of a $34 million interim profit, Contact Energy lost 2c to 428.

The Warehouse, which warned this morning that its annual profit would be lower than expected, saw its shares tumble as much as 155, or 28 per cent, to 396 before settling at 406, down 145.

The company said it expected after-tax earnings of up to $80 million, down from the previous ceiling of $95 million.

"...The stock probably overreacted but that's the nature of these earnings downgrades," Mr Allen said.

"The market tends to overreact on the downside until it sees proof that things are going to get better."

By the end of the day, some buyers were taking advantage of the company's bargain basement share price, its lowest point in three years.

"The rest of the market's been affected by the capital raising of AMP and Promina, we're seeing a little bit of cash coming out for those two things," he said.

AMP's shares are in a trading halt after it announced a plan to hive off its troubled British unit, take $A2.6 billion ($NZ2.88 billion) in writedowns, and raise $A1.5 billion from institutional and retail investors.

That coincides with the public offering of Royal & Sun Alliance's Promina unit, which closed at the end of trade today.

Tranz Rail shares bucked the trend to close up 5c at 45 after announcing today its year-to-date operating profit, from nine months of trading, was $30.3 million, 18 per cent below forecast.

"They basically confirmed what they told the market a few weeks ago, and you may have seen the end of a big line of selling yesterday, so those two things combined led to a...rise in the share price today," Mr Allen said.

Elsewhere on the market, Michael Hill lost 28c to 422, Carter Holt Harvey was down 1c at 163, Fisher & Paykel Appliances lost 5c to 1070, Trustpower was down 15c at 420, and Guinness Peat Group fell 2c to 160.

Auckland International Airport rose 3c to 518, Air New Zealand was up 1c at 46, while F&P Healthcare rose 15c to 1090, and Tower was up 1c at 213.

BIL International was up 6c at 54 after it said yesterday it had acceptances for more than half of its British hotel asset Thistle, in its hostile takeover offer. BIL is already Thistle's largest shareholder with a 45.6 per cent stake.

There were 56 falls and 31 rises on the 127 stocks traded.

On Wall St, the Dow Jones industrial average finished down 25.84 points, or 0.30 per cent, at 8454.25; the broader Standard & Poor's 500 Index declined 0.62 of a point, or 0.07 per cent, to 916.59; and the Nasdaq Composite Index advanced 8.25 points, or 0.56 per cent, to 1472.56.

- NZPA