NZ stocks: Telecom rises as 'vicious' selling stops

The sharemarket made a muted rebound yesterday from its savaging of the past two days, but uncertainty hangs over the main culprits for the market's descent.

There was a rebound in the stocks which have dragged the market down this week - the Fletcher group and Telecom - but ABN Amro broker Nick Caughey said sentiment remained fragile.

"It's a very, very difficult market," he said.

But, the market's firm tone at the close was "somewhat reassuring," he said. "The balance of power was again with the buyers, which was nice to see."

Telecom is also likely to get a boost next week from the Government's apparent decision to pull the plug on the idea of an independent telecommunications industry commissioner.

Ord Minnett equities director John Rattray said the "vicious" selling driven by portfolio investors had dried up.

The NZSE-40 closed 16.47 up at 1928.56. Turnover in Telecom was reported at $47.6 million. The market leader lifted 8c to 548.8, having been sold down 55c in the previous two days.

Mr Rattray said the problem for Telecom was that until the Government decided what parts of the report into the telecommunications industry it implemented, there would be a degree of uncertainty over the stock.

He said that although Ord Minnett viewed Telecom as oversold, rallies would be muted, because of uncertainty over the report.

Fletcher Forests was down 5c to 67 on new speculation that its sale had foundered and it may need to recapitalise.

"Comments like these will certainly rattle the cage of those expecting short-term gains," Mr Rattray said.

Fletcher Building firmed 5c to 220 with rumours that its sale had already been arranged. But, it was likely to be stalled by problems with the Forests sale.

Tranz Rail rose 5c to 375 on rumours that it had sold, or would spin off its passenger service. Sky City rebounded 10c to 680, and Lion Nathan rose 12c to 494 on good volume of $15.9 million. Baycorp rose 35c to 1215 and Advantage fell 4c to 195.

- NZPA