NZ stocks: Shares slip into red as war threat looms

12.00pm

The New Zealand sharemarket slipped into the red this morning on lacklustre volume as investors adopted a cautious approach ahead of a possible United States-led war on Iraq.

The new benchmark NZ50 gross index was down 6.42 points at 1901.10 by 11.30am, while the NZSE40 capital index eased 5.01 points to 1884.27.

Total market turnover was worth a meagre $12.3 million.

"The market is pricing in what is happening overseas and investors are going for a cautious, wait-and-see approach," ABN Amro Craigs retail equities adviser Nigel Scott said.

"It's lacking in order flow, but there's not aggressive selling either."

On Wall St, stocks tumbled on Monday as a March 17 deadline set last week by the US and Britain for Iraqi President Saddam Hussein to comply with United Nations disarmament demands loomed. France and Russia have said they would vote against the deadline.

The Dow Jones industrial average slipped closer to multi-year lows set on October 9, when the benchmark gauge closed at 7286.27.

The Dow closed down 171.85 points, or 2.27 per cent, at 7568, while the technology-laced Nasdaq was down 26.92 points, or 2.06 per cent, at 1278.

Among the top stocks here, Auckland Airport was down 5c at 529, Fisher and Paykel Appliances dropped 8c to 952, Fletcher Building shed 4c to 357, Carter Holt Harvey eased a cent to 172, Sky City lost 3c to 865, and Telecom dropped a cent to 436.

Falls outnumbered rises by 42 to 21 among the 99 stocks traded so far.

On the upside, INL rose a cent to 321, Ports of Auckland added 5c to 621 and Advantage Group added 2c to 22c.

Discount retailer The Warehouse added 8c to 555 after announcing yesterday its January half year profit rose 7.2 per cent to $63.5 million before a $7.5 million one-off charge lowered the bottom line to $58.2 million.

While the double digit growth of past years has evaporated, the result was in line with guidance and expectations.

Official data out today showed retail sales rose 1.1 per cent in January on a seasonally adjusted basis, compared with a 0.5 per cent rise in December.

The Statistics New Zealand figures were better than expectations of a 0.4 per cent rise and confirmed the strong trend of domestic spending over the last year.

Goodman Fielder was a cent higher at 175 after Burns Philp said it had raised its stake in the company to 51.79 per cent.

Burns Philp -- controlled by New Zealand's richest man Graeme Hart -- is in the process of a A$2.4 billion ($2.66 billion) hostile takeover of Goodman .

Goodman, Australia's biggest food company with brands like Uncle Tobys and White Wings, continues to oppose the A$1.85-per-share offer, saying shareholders still have until the end of the month to change their minds.

- NZPA