NZ stocks: Stocks lose momentum after solid start

The New Zealand sharemarket started yesterday reasonably positive but ended a bit softer after getting ahead of itself, Merrill Lynch New Zealand institutional sales vice-president Richard Leggat said.

The NZSE-40 Capital Index closed down 1.46 points (0.07 per cent) at 2138.43, and the NZSE SCI Capital Index was 3.90 points (0.07 per cent) weaker at 5389.65.

Rises outnumbered falls 51 to 43 among the 149 stocks traded, with turnover totalling a reasonable $101 million.

Market giant Telecom was the major player yesterday, with turnover of 5.2 million shares worth $39.1 million accounting for more than a third of the action.

"Telecom initially was quite strong but it drifted back through the day," Mr Leggat said. The stock closed up 4c at 750.

Telecom's share price was boosted 19c to $7.46 on Monday after talk of an Asia-Pacific telecommunications alliance.

Speculation suggested that Telecom was considering an alliance with Japan's biggest mobile phone operator, NTT DoCoMo, and Australia's Cable & Wireless Optus. Telecom is not commenting on the rumours. "There is perhaps a realisation that's not going to happen," Mr Leggat said.

Fletcher Energy did an about-turn yesterday, clawing back some of Monday's downward slide to end 4c stronger at 752.

Energy had traded as high as 762 during the day and closed off its highs, Mr Leggat said.

However, the rest of the group was soft, with Building closing 9c down at 221 and Forests off 1c at 86.

Baycorp continued to see some profit-taking, closing down 35c at $12.90 on top of a 35c fall on Monday.

Carter Holt Harvey slipped 5c to 185. "It has continued to weaken after what was a good result," Mr Leggat said. "The market is saying the result was good but there is no catalyst for re-rating at the moment.

"I was a bit surprised to see Carter Holt Harvey and Fletcher Building weaken so much."

Elsewhere on the market, Advantage and Axa both closed 6c stronger at 306 and 329 respectively, while Contact and Infratil both gained 3c to 267 and 129.

PDL Holdings rallied 10c to 460 and Montana gained 4c to 234.

On the downside, Auckland Airport and Frucor were both 5c softer at 277 and 232 respectively, while GDC was down 8c at 492 and Sky TV came off 6c at 414.

- NZPA