NZ stocks: Shares claw back early losses

6.00pm

A late surge on Telecom shares helped the New Zealand sharemarket largely recover from early losses when Baycorp Advantage was hammered for lower earnings forecasts.


The NZSE-40 capital index was down 2.19 points to 1946.33 on moderately strong turnover worth $71.1 million.


Credit agency Baycorp was the most traded stock with 7.3 million shares worth $12.9 million changing hands.


Shares plunged 44 per cent to 182, down $1.43, after touching to a record low of 158 after warning it expected only minor growth this year.


The stock peaked at $7.70 at the end of last year but has lost much gloss as investors get impatient to see last year's merger benefits filtering through.


ASB Securities broker Andrew Kelleher felt the stock had been oversold.


``The way the market deals with anybody delivering bad news was extremely ably demonstrated today.


``Someone got on a roll selling this stuff and didn't let up.''


Also weighing on early trading was Telecom's first quarter results. Telecom, New Zealand's largest listed company, recorded a net profit of $146 million for the three months to September 30, down 3.3 per cent on the same period a year earlier.


Telecom shed 3.3 per cent as investors voiced their disappointment that the results were at the lower end of the company's $145 million-$150 million profit warning last week.


Earlier market expectations were around the $170 million mark.


But later in the session, Telecom bounced to close up 7c at 488.


``It's basically in line with our expectations in terms of the business tracking to plan, although the cash position is a little better than expected,'' Merrill Lynch analyst Patrick Russel said.


Finance company Tower closed up 3c to 174 after it assured the Stock Exchange that it gave its profit warning as soon as a review of Tower Australian became clear.


Tower warned of an annual loss in the region of $30 million to $40 million, rather than the $50 million to $70 million profit expected by analysts, excluding further possible writedowns of its Australian unit, Bridges.


Tower's share price fell from $3.55 before a trading halt on October 31.

Other moves included a 20c fall on Fisher & Paykel Healthcare to 1060 and a 25c decline in its appliance twin to 1050; a 5c drop in Carter Holt Harvey to 163; and a 10c rise in Fletcher Building to 316 as shareholders approved a proposed capital notes issue.

Auckland Airport jumped 13c to 528 as rumours continued to swirl about the possibility of a trade buyer snapping up the Auckland City Council's 25 per cent stake, making the stock more attractive.

``A number of investors like the story... and people believe the stock is a bit undervalued,'' said Richard Leggat, head of research at UBS Warburg.

Falls outnumbered rises 61 to 24 on 122 stocks traded.

On Wall St, the three major US stock indexes slid to their lowest closing levels in at least two weeks on Monday as defiant rhetoric from the Iraqi parliament on a new UN resolution soured Wall Street's mood on the heels of a month-long rally.

The technology-laden Nasdaq Composite index dropped 40.09 points, or 2.95 per cent, to 1319.19, while the blue-chip Dow Jones industrial average slumped 178.18 points, or 2.09 per cent, to 8358.95, its lowest close in more than two weeks.

The broad Standard & Poor's 500 lost 18.55 points, or 2.07 per cent, to 876.19, its lowest close since mid-October.


- NZPA