NZ stocks: NZ shares follow offshore markets lower

12pm

New Zealand shares followed their offshore counterparts lower this morning.

The benchmark NZSE-40 index was down 7.97 points at 1945.89 by 11.30am on slim turnover worth $12 million.

Britain's FTSE 100 benchmark index closed down almost 2 per cent overnight, at 3658.3, led by concerns of a possible cash call in the insurance sector. A slide on Wall Street piled on the pressure.

United States stocks snapped a two-day rally that had lifted the blue-chip Dow almost 300 points, as renewed fears of war with Iraq unnerved investors.

The Dow closed down 0.5 per cent at 8000.60, recovering from a decline that reached 105 points, the Standard & Poor's 500 Index was down 0.71 per cent at 845.13 and the tech-laced Nasdaq lost 0.91 per cent to 1334.32.

Here, falls outnumbered rises by 38 to 22 among the 102 stocks traded so far.

Among the leaders, Telecom eased 4c to 448; Carter Holt Harvey was a cent lower at 175; Auckland Airport rose 2c to 550; Contact Energy dropped 4c to 458; Ports of Auckland dipped 5c to 645; and The Warehouse lost a cent to 579.

Macquarie Equities investment director Arthur Lim said the market was in for a quiet day with the fourth America's Cup race on the Hauraki Gulf at 1.15pm.

There were two key talking points on the market, he said: Rubicon's move yesterday to increase its Fletcher Forests stake to just under 20 per cent; and a transTasman tax deal penned between Finance Minister Michael Cullen and Australian Treasurer Peter Costello yesterday.

Rubicon, Forests' biggest shareholder, said it had spent $14.4 million increasing its stake from 17.6 per cent to 19.997 per cent. Six months ago Rubicon tried to exit the company through the failed Central North Island Forestry Partnership deal, so the latest move has raised eyebrows in the investment community.

Rubicon was a cent lower at 71c today, and Forests was down 2c at 108.

Under the tax deal -- called "triangulation" -- New Zealand companies and individual shareholders with Australian investments stand to reap millions of dollars in dividends from April 1 as it changes the way profits are taxed.

Until now, such profits have been taxed twice -- once in Australia and again here. From April profits of New Zealand and Australian companies doing business in each other's country will have their tax payments recognised in both countries.

Mr Lim said the deal would make it more attractive for Australians to invest in New Zealand stocks.

"WestpacTrust for example. I would expect the gap, which at one time was as high as $2 (between the Australian and NZ share prices) will close down to virtually nothing.

"It is up 15c this morning, which means the gap is down to 27c."

Fisher & Paykel Appliances, Fletcher Building and Sky City all stood to attract more Australian investors under the deal, Mr Lim said. Appliances was up a cent at 1006 today, Building shed 2c to 351, and Sky City was 2c lower at 835.

In other moves, rural services company Wrightson was down 3c at 114 after posting a net after tax profit of $4.1 million for the half year to December, down from $6.3 million a year earlier.

Media company INL was down a cent at 315 after rallying strongly yesterday on its $38.8 million first half result, up 43 per cent.

Its 66 per cent pay TV subsidiary Sky Network TV was down 3c at 365 after posting a narrower $4.37 million half year loss yesterday.

Shares in Vertex dived as much as 20c to 145 after millionaire businessman Sir Selwyn Cushing yesterday sold his recently acquired 7.5 per cent stake to Christchurch businessman George Gould.

The plastics container maker today lowered its full year profit forecast for the year ended March 31.

Vertex said it was now expecting earnings before interest and tax (ebit) to come in between $9.2 million to $9.6 million compared with the previous estimate in September of $10.1 million.

It last traded 13c lower at 152. The stock has now lost most of the gains it made in the last week after the pair engaged in a bidding war for the company.

- NZPA