NZ stocks: Market treads water, Fletcher Building recovers

12.00pm

The New Zealand sharemarket drifted in directionless trading this morning with the main feature being the partial recovery of Fletcher Building.

The construction industry stock was hammered 7 per cent yesterday after it issued a profit warning, saying operating earnings would be hit $20 million by the rising kiwi dollar and high power prices.

However, brokers said the selling had been overdone. Building shares were up 4c to 324 on very heavy turnover worth $22.2 million and traded as high as 330.

That turnover boosted overall market turnover to $40.2 million at 11.45am.

The NZ50 gross index was down just 0.39 points to to 1971.66 and the top-40 index was down 0.61 points to 1938.84.

Stephen Wright of ASB Securities said that Fletcher Building had been oversold.

"$20 million has been knocked off its earnings but it is still relatively cheap. People had factored in the end of building boom," he said.

UBS Warburg and First NZ Capital were the brokers involved in most of the turnover in Building.

Market leader Telecom initially succumbed to profit taking, falling 2c to 468, but then picking up to be 2c ahead on yesterday's close at 470. Telecom has risen from around 420 in the past month mainly on the prospect of the company paying a higher proportion of its profits out in dividends.

Tranz Rail had a volatile morning, settling at yesterday's 79c price after trying the upside and downside. Brokers said negative sentiment prevails.

"Investors are as angry as hell," Mr Wright said of the company which on Monday told the market it would fail to meet sales and profit targets in the third quarter. "It's disappointed time after time so it's going to take longer to win back credibility."

Westpac NZ, which yesterday revealed its BT Funds Management had failed to meet regulatory requirments and faces repaying some investors with interest, fell 6c to 1615.

Among other moves, Contact Energy was up 3c to 449, Fisher & Paykel Appliances was up 4c to 1030, F&P Healthcare was down 8c to 992, Taylors Group was up 3c to 157 and Turners Auction was down 5c to 265.

In all, there were 35 rises and 27 falls amonth the 96 stocks traded.

The US market closed flat as investors turned their attention back to corporate earnings.

- NZPA