NZ stocks: strong Kiwi, positive Wall St stengthen local shares

The New Zealand sharemarket appeared to be enjoying a second day in the sun, following a rebound in US equities.

US President George W Bush is expected to release details tonight of a US$600 billion economic stimulus package, including proposals to cut taxes on dividends, speed up reductions in income tax rates and allow companies to quickly write off more of their investments.

Shaken by war fears, the news lifted spirits on US equity markets, with the Dow Jones rising 2 per cent to 8,773.57.

A similar rise was seen on the New Zealand sharemarket, with the NZSE-40 capital index up 11 points to 1986.91 on $30.3 million turnover just after 11am.

Yesterday the index closed up 25.40 points, or 1.3 per cent, driven by fresh offshore interest in top stocks Telecom and Carter Holt Harvey.

Today telecommunications continued to be flavour of the day, with Telecom topping turnover worth $10.8 million, up 4c to 476, and Australia's Telstra in second place, up 5c to 485.

Telecom, the weightiest stock by far on the Top 40, gained 16c yesterday and dealers could not quite place their finger on the reason why.

However, the New Zealand dollar's strong rise this week was thought to be a factor.

"When the New Zealand currency has firmed previously, the New Zealand Telecom price has actually followed suit," said Nigel Scott, retail equities adviser for ABN Amro Craigs Equities.

"In a thin-natured market, currency seems to be a little bit of the theme. We are an exporting nation so people will be looking at what kind of coverage people have for their fx (foreign exchange)."

The strong currency was also thought to have had a positive effect on Sky TV, which buys much of its programming from overseas. Sky jumped 10c to 355 and is two-thirds owned by publisher INL, which was up 8c to 318.

Forestry giant Carter Holt was up 3c to 183, after it rose 4c and hit a 4-month high yesterday.

Meat company Richmond rocketed 51c to 291 after South Island counterpart PPCS launched a full takeover bid for the Hastings-based company.

Another big winner, credit company Baycorp Advantage was up 3c to 223, capitalising on yesterday's 17c gain.

Tranz Rail continued to trade strongly, up a cent to 111 despite bad publicity about heat causing temporary line closures and affecting timetables.

Brokers suggested the company might also benefit from the stronger kiwi dollar because of rent it pays to the US owners of its Aratere ferry.

Other moves included a 3c gain to 25 by Advantage Group. Michael Hill down 4c to 635; Tower Group up 5c to 223; and Briscoe up 4c to 279.

There have been 43 rises and 17 falls on 96 stocks traded so far.

On Wall St, other markets also reacted positively to the word that economic relief could be on the way. The broad S&P 500 gained 20.42 points, or 2.25 per cent, to 929.01, and the technology-packed Nasdaq Composite Index rose 34.17 points, or 2.46 per cent, to 1,421.25.

Telco shares got a boost after a report that US regulators will likely stop making local phone companies rent their networks to rivals, a move that could reduce competition and price-cutting.

- NZPA