NZ stocks: Telecom surge lifts sharemarket

12.00 pm

A surge by Telecom lifted the sharemarket in late morning trading out of early weakness.

Fisher & Paykel Healthcare had weighed the market down but two brokers hit Telecom hard and from being down 1c it jumped 14c.

By 11.40 am it was up 13c at 510 -- its first foray above $5 since September 5.

The stock is now up 24 per cent from an eight-year low touched on October 24.

ABN Amro broker Nigel Scott said it appeared as if it was natural orders from yesterday. He said it could be related to the Morgan Stanley Capital Index or allocation activity.

"I can't put a finger on it. Two brokers suddenly came in and started surging on the stock."

A report by independent telecoms analyst Paul Budde yesterday said Telecom could be a takeover target.

The NZSE-40 capital index was up 7.75 points to 2067.99 by 11.40am.

ASB Securities broker Andrew Kelleher said the market had looked like it would struggle given weakness overseas.

The Dow Jones ended down 1.6 per cent or 160.7 points, although off its lows, as investors were spooked by Enron hovering on bankruptcy -- one of the biggest corporate implosions in US history.

Locally, turnover of $37 million was topped by Fisher & Paykel Healthcare with $9 million.

It fell 30c to 1770. Mr Kelleher said it was no surprise Healthcare was pulling back given its performance of the last few days as Australian investors chased it aggressively.

Sister company F&P Appliances also fell 30c, to 900.

Carter Holt initially fell 4c, but recovered to be just 1c down from yesterday at 171. It gained 5c yesterday.

The Warehouse, a big gainer yesterday, eased back 7c to 665.

Fletcher Building, another winner yesterday, pulled back 3c to 285.

On the plus side were Advantage, 4c to 63, Cavalier, 4c to 600, Horizon 15c to 1325, Pacific Retail 5c to 195 and Westfield 10c to 425.

Air New Zealand A and B shares were down just 1c to 33c and 35c respectively despite two brokerages putting out dire sell notes on the stocks.

ABN Amro and Credit Suisse First Boston reiterated their "sell" recommendations, nominating target prices that are around half the airline's current share price.

"We view the pricing as too high, and believe that fair value is around 18c a share (based on a composite valuation based on mid-cycle earnings)," CSFB analyst Murray Brown said in a research note dated November 28.

CSFB put a 12-month target of 21c on the shares while rival brokerage house ABN Amro had a target price of 13c.

- NZPA