NZ stocks: Shares ease a little, pulled back by Telecom

12:00 pm

New Zealand shares dipped a tad in this morning, retracing a late surge by Telecom yesterday.

At 11.30am, the benchmark NZSE-40 index was down 8.88 points at 2058.43 on turnover worth just $32 million.

"We have had a very quiet start to the day," Forsyth Barr Frater Williams equities dealer Alan Wills said.

"The market had a late, last-minute ramp yesterday afternoon that put the index up, but that was mainly Telecom."

Telecom makes up 22 per cent of the top-40 index, so any moves in the stock tend to sway the whole market.

A large tract of over 800,000 Telecom shares, worth around $4 million, changed hands in the last hour of trading yesterday, boosting the stock to 515.

The telco eased to 508 this morning, dragging the index back with it.

Today's move by the US Federal Reserve to trim its key interest rate by 25 basis points to 1.75 per cent was widely-anticipated, and had little impact on the local market, Mr Wills said.

"They did the predictable thing. It would have been a surprise if they had done nothing," he said.

Today's cut, the Fed's 11th this year, takes the federal funds rate - the interest banks charge each other on overnight loans - to its lowest level since July 1961.

The Fed's cut is aimed at bolstering the world's powerhouse economy, which has been in recession since March and was dealt another severe blow by the September 11 terrorist attacks.

Among the leading local stocks this morning, Auckland Airport slipped 2c to 393, as did Contact Energy at 402, Fisher and Paykel Healthcare jumped 20c to 1685 while its appliance cousin added 4c to 979 and Ports of Auckland was up 3c at 545.

Restaurant Brands gained a cent to 190 after yesterday posting a 11.8 per cent increase in fourth quarter sales, while Lion Nathan was up 5c at 550 after saying yesterday it was on track to post double-digit earnings growth in the current year.

In all, falls outnumbered rises by 38 to 35 among the 116 stocks traded.

In the US overnight, stocks ended mixed after a sour earnings forecast from drug giant Merck & Co Inc let the air out of a rally sparked by the Fed's interest-rate cut.

The Dow slumped 33.08 points, or 0.33 per cent, to 9,888.37. The broader Standard & Poor's 500 Index fell 3.17 points, or 0.28 per cent, to 1,136.76.

The technology-laden Nasdaq Composite Index held a small gain of 9.81 points, or 0.5 per cent, to 2,001.93.

- NZPA