NZ stocks: Shares pare back gains as rates tonic wanes

12.20 pm

The New Zealand sharemarket pared back yesterday's gains today, as the rate cut-induced liquidity in global markets started to wear off.

"We have drifted a little bit this morning," ABN Amro institutional dealer Nigel Scott said.

"I have been surprised by the strength of the market all week really (driven by) rate cuts globally."

The benchmark NZSE-40 index was trading down 10.60 points, or 0.56 per cent, at 1889.21 by just after 11am, on turnover worth $20.9 million.

Air New Zealand continued to feature, following yesterday's announcement of an $885 million package from the Government to recapitalise the ailing flag carrier.

Its shares gained ground in early trade after yesterday shedding around 30 per cent of their value. The locally-owned A shares were up 2c at 30c, while the unrestricted B shares added 3c to 29c.

"Retail New Zealand is still responding in a very positive fashion to it," Mr Scott said.

That rally was likely to be short-lived, he added.

"I think once people see the underlying numbers with the company not earning any money for a couple of years they will come to the view that Air NZ is still very much a wait-and-see situation.

"One would imagine that this is round one for Air NZ really," -- given the problems facing airlines globally following last month's terrorist attacks.

"It is tremendous to have it recapped (recapitalised), but what other skeletons are going to come out of the closet?" Mr Scott said.

Outside Air NZ, the broader market was fairly subdued.

SouthPort was up 5c at 145 after yesterday announcing a special dividend of 11.5 cents per share, payable on November 2.

WestpacTrust added 5c to 1485 and Wrightson was up a cent at 104.

Stocks to lose ground included Baycorp, down 15c at 1160, Contact, down 4c at 337, Fisher & Paykel, down 12c at 1338, Auckland Airport, down 6c at 340 and Telecom, down 5c at 444.

"We have had a few stocks starting to hit the top end of their ranges again like Contact and Auckland Airport," Mr Scott said.

Lion Nathan was down 5c at 560 after this week announcing part two of its expansion into the Australian wine market. The expansion has troubled investors who sense the brewer may be paying to much for its Australian Assets.

In all there were 33 rises and 31 falls among the 105 stocks traded.

In the United States overnight, technology stocks rose again following an upbeat forecast by bellwether Dell Computer Corp, but blue chips finished lower as jittery investors opted to sell amid persisting worries about sliding corporate earnings.

The technology-laced Nasdaq gained 16.52 points, or 1.05 per cent, to 1597.33, logging its third straight session on the upside. The blue-chip Dow Jones average fell 62.9 points, or 0.69 per cent, to 9060.88 and the broader Standard & Poor's 500 index slipped 2.66 points, or 0.25 per cent, to 1069.62.

- NZPA