NZ stocks: Shares rise, buoyed by Wall Street rally

12.00pm

The New Zealand sharemarket traded higher on modest volume this morning, following on from a sharp rise in United States markets.

The NZ50 gross index was up 12.59 points at 1986.22 by midday, while the NZSE-40 capital index added 13.48 points to 1954.20.

Turnover of 10 million shares was worth $23.5 million.

ABN Amro Craigs retail equities advisor Nigel Scott said the local bourse was taking its lead from Wall St, where stocks finished sharply higher on Monday, giving the Dow its biggest gain in about a month, as solid results from blue chips McDonald's Corp and Procter & Gamble Co fed investors' optimism for a rebound in corporate profits and the US economy.

"The US reporting season so far has actually thrown up less dogs, or less poor results, rather than exceptional results," Mr Scott said.

"Yesterday was Monday-itis, today we're trying to go a little bit better. Most people are happy to finally have a full week of activity."

The Dow Jones industrial average finished up 165.26 points, or 1.99 per cent, at 8471.61, its biggest rally since an advance of 215 points, or 2.6 per cent, on April 2.

The broader Standard & Poor's 500 Index rose 16.03 points, or 1.78 per cent, to 914.84, while the technology-laced Nasdaq Composite Index gained 27.70 points, or 1.93 per cent, to close at 1462.24.

Here, rises narrowly outnumbered falls by 36 to 31 among the 116 stocks traded so far.

Market number one Telecom recovered yesterday's loss, gaining 8c to 458, The Warehouse was up 12c at 568, Carter Holt Harvey was steady at 164, as was Fisher and Paykel Appliances at 1065, Sky City slipped 2c to 826, Sky TV rose 2c to 398, INL was up 5c at 405, and Auckland International Airport was up 8c at 500.

TrustPower was steady at 425 after Australia's biggest energy retailer, The Australian Gas Light Co (AGL), yesterday announced it would quit its stake in the company by selling its shares into a buy-back offer for A$135 million ($151.90 million).

TrustPower announced plans for a two-for-seven buy-back at $3.70 a share last month and AGL said it had agreed to accept for the whole of its 20.5 per cent shareholding.

The move clears the way for AGL to focus on its key New Zealand asset, 66-per cent owned NGC Holdings Ltd. Mr Scott said investors would now be eyeing a capital return from that company, which last month rubber-stamped $592.5 million of power station sales.

The capital return would require AGL's approval.

"People are concentrating on NGC and the potential for the capital payout or what the ongoing structure of NGC will actually be," Mr Scott said.

Tranz Rail shed a further 5c to 40c as investors await news of the trouble rail operator's fate. Chances of a Government bailout are slim after Finance Minister Michael Cullen yesterday said it would not rescue Tranz Rail, which has been downgraded to junk status by ratings agencies.

Air New Zealand recovered 2c to 39c and Tourism Holdings Ltd was up 5c at 91c after the World Health Organisation said yesterday that the Sars outbreak, responsible for over 300 deaths worldwide, had peaked outside of China, and Vietnam said it had contained the deadly respiratory disease.

Contact Energy slipped 7c to 444, despite the worsening power shortage, Fisher and Paykel Healthcare was steady at 1065, and ANZ Bank slipped 12c to 2060.

- NZPA