NZ stocks: Market drops 1pc as index dives below 2000

12.00pm

The barometer NZSE-40 Capital Index fell below 2000 for the first time in six weeks this morning as the New Zealand sharemarket fell in line with weak global markets.

Market leader Telecom dropped 9 cents to 470 at the bell this morning but later partially recovered to 473.

Following on from a 2.8 per cent dive on Wall Street, where concerns about Iraq and corporate profits weighed the United States market down, the NZSE-40 dropped 22.20 points to 1998.72 by 11am on turnover worth $18.31 million.

"Following on from the weakness in overseas markets, particularly in the US, we have seen some pretty aggressive selling of some of the leaders," Forsyth Barr Frater Williams executive director Don Turkington said.

The Dow Jones industrial average tumbled 2.82 per cent overnight to its lowest point since it reached a five-year lows on July 23.

Dr Turkington said market leaders had been under selling pressure for some time and it was normal that the bearish sentiment in the US fed through to New Zealand.

AMP's shares continued to plunge, plumbing a new low of $13.40, down 70 cents, after shedding 90 cents yesterday.

The drop in the last two days has wiped over $1.5 billion off its market capitalisation.

AMP shares have slumped from over $27 in late June last year and from $22.63 at the start of this year. The stock has been rocked this week after the Sydney-based fund manager announced its Pearl Assurance unit in Britain had failed to meet minimum regulatory capital requirements.

Other significant falls were: Michael Hill, down 7 to 573; Baycorp Advantage, down 11 to 370; Nuplex, down 9 to 320 and Carter Holt, down 4 to 164.

Craig Robins of Salomon Smith Barney said Telecom and Carter Holt had broken through their key support levels of 480 and 170 respectively.

Independent Newspapers fell 16 cents to 314 and Sky TV dropped 16 cents to 354 on light turnover.

Mr Robins said both had been having a good run in recent weeks and there was a downward trend for media groups globally.

Richmonds rose 9 cents against the tide to 165 on slim volume.

So far, there were 12 rises and 53 falls among the 112 stocks traded.

- NZPA