NZ stocks: Market responds to Wall St surge

12.00pm

The New Zealand sharemarket, led by heavyweight Telecom, was spurred higher in morning business today by a strong performance by Wall Street on Friday.

Telecom sprinted 7c ahead to 529, its highest level since the end of May, in early trading but fell back to 525 by 11.45am.

The top 50 index rose 14.13 points to 2183.90 and the top 40 index rose 10.12 to 2110.76.

Volume was moderate at around $25 million with nearly $10 million of that done pre-market.

US stocks surged on Friday, with the Dow average hitting a five-week high, after a surprisingly strong durable goods report bolstered investors' confidence that an economic rebound is on its way and traders snapped up shares hit in Thursday's sell-off.

A government report showed new orders for costly manufactured goods shot up in June at the fastest rate in five months. Orders for durable goods climbed 2.1 per cent, beating forecasts for a 1.0 per cent increase, and fuelling optimism an economic recovery is shaping up.

The Dow jumped 172.06 points, or 1.89 per cent, to 9284.57, its highest close since June 18. The broader Standard & Poor's 500 Index climbed 17.08 points, or 1.74 per cent, to 998.68. The technology-dominated Nasdaq Composite Index jumped 29.28 points, or 1.72 per cent, to 1730.70.

Tranz Rail shares jumped 3c to 106 after a report on Toll's 95cps bid by independent valuer Grant Samuel said the offer was too low. The stock traded at high as 108.

Grant Samuel assessed the value range to $1.34 to $1.62 per share if the Toll-Crown proposal is implemented.

UBS Warburg's head of research Richard Leggat said the valuation was close to where his firm expected it to be.

"The Toll deal that the Government has offered is worth $1.40-plus.

"Toll's bid at 95 cents is not going to be good enough. It will depend on how much they are prepared to lift their bid," he said.

"I suspect they will find it difficult to lift it to a level that institutions will find attractive enough to accept."

On that scenario the bid, requiring 90 per cent acceptance, would lapse, he said.

It would then be up to the Tranz Rail board to persuade the Government to offer institutions the same deal that they had offered Toll.

Toll managing director Paul Little told NZPA his firm did not intend to lift its offer.

Auckland Airport hit $6 with a 1c rise while Fletcher Building sprinted above $4 with a 5c rise to 401.

Fisher & Paykel Appliances rose 20c to 1360 and carpet maker Cavalier rose 9c to 459.

Carter Holt Harvey rose 4c to 170 on the view that cyclical stocks will pick up with a world economic upturn.

Others in the positive included: The Warehouse, up 5c to 485, Vertex, 5c to 170, Baycorp Advantage, 6c to 172, Steel & Tube, 4c to 357 and Hellaby, 4c to 444.

Falling stocks included AMP, down 3c to 550, Fletcher Forests, 1c to 115 and Software of Excellence, 6c to 132.

In all, there were 39 stocks up and 17 down among the 101 traded.

- NZPA