NZ Stocks: Quiet sharemarket brightened by Baycorp

12.30 pm

Baycorp proved a star performer in an otherwise cautious sharemarket this morning.

By 11.30am, the credit agency was up 57c to 1260 on the back of revived merger talks with Australian counterpart Data Advantage.

"The price action would tend to suggest that completion of a deal is nearing with Data Advantage," said Brett Wilkinson of DF Mainland.

"Going by the ratios it would appear that the ratio would be something like 1.5 (shares in) Data Advantage for every Baycorp."

The NZSE-40 recovered a little but was still down 6.48 points, or 0.31 per cent, at 2058.17 and Mr Wilkinson said today's turnover started out at normal levels for recent weeks.

"This market continues to trade in a tight range with a large buy or sell order being able to dominantly move the market."

Turnover so far is 20 million, led by Fletcher Forests and utilities shareholder Infratil, a major shareholder in energy retailer Trustpower. Infratil's share price stood 2c higher at 16 8, boosted by an off-market crossing of 2.98 million shares at 168 each.

There was strong trading in Fletcher Forests ordinary and preference shares, which Mr Wilkinson said reflected the decreasing likelihood of a takeover action, and increasingly the possibility of a giant forestry venture with Carter Holt Harvey and an offshore partner. Both Fletcher shares were down 1c to 32.

Air New Zealand's locally-traded A shares eased 4c to 112 after running up yesterday in anticipation of a merger of the airline's A and B shares. Air New Zealand today confirmed it was seeking Government approval to scrap the distinctive share structure - designed to keep majority ownership of the airline in New Zealand to protect international landing rights. Air NZ's unrestricted B shares were steady at 130.

Electricity retailer Contact drifted down 6c to 316 as the southern lakes begin to fill and the power crisis abates slightly. Contact has been a major benefactor of the crisis due to its large generation capability.

Total market turnover so far was worth $27.5 milion, headed by Infratil and Telecom.

Other movements just after 11.30am included Sky City down 2c to 1128; Telecom down 5c to 533; Fisher & Paykel down 13c at 1275; and The Warehouse was steady at 560.

Tranz Rail rose 9c to 425, unharmed by the release of its year-to-June figures yesterday which showed a small net profit of $5.6 million. The company, which is halfway through its restructuring programme, said the result was in line with its expectations although some analysts had expected a net profit four times larger.

So far falls outnumber rises by 39 to 33 and 123 stocks have been traded.

- NZPA