NZ stocks: Telecom volatile as rumours swirl round Optus play

The sharemarket ended the day unsettled by concerns about Telecom, with the key top 40 index closing down 18 points.

The NZSE-40 capital index ended at 1905.60, down 0.94 per cent.

The small companies' NZSE SCI capital index gained 22.12 points, or 0.43 per cent, to 5144.19.

Shane Gavegan of Deutsche Securities said the market remained volatile, with Telecom leading the downward charge, falling 11c to 487.

Total turnover of 25.30 million was valued at $88.72 million.

Turnover was inflated by a transtasman crossing of 2.5 million Telstra shares before the market opened. "I would suggest volume was actually fairly quiet if you take that out," Mr Gavegan said.

"I think there's concerns about a press article in Australia citing [Japan telco] NTT DoCoMo not going to pursue the Cable & Wireless Optus assets, effectively leaving Telecom without a partner.

"To be fair, Telecom have never said they are lining up with DoCoMo so it is a bit of speculation. Telecom has crept up about 30c or 40c from its low just before the New Year."

Fletcher Energy continued to track up, gaining 6c to $8.19. "The currency falling slightly probably helped, with a bit of stability in [US asset] Capstone's price overnight," Mr Gavegan said.

Among other Fletcher stocks, Building was down 1c at $2.07 and Forests was up 1c at 33c.

Air New Zealand B was down 15c at $2.10 on light volume after a bad session for airline shares in the US overnight. Air NZ A shares were unchanged at $1.60.

Pulp and paper stocks also fell in the US overnight, pushing Carter Holt Harvey down 5c to 160.

Contact Energy fell a further 3c to $2.64 amid the continuing woes of US cornerstone shareholder Edison Mission Energy.

The Warehouse lost 32c to $5.88, a fall seen as related to weak retailing patterns in the Australian and New Zealand markets.

Among other shares, Auckland Airport was up 4c at $3.25, Baycorp rose 25c to $12.40, DB Group gained 30c to $5.00, and Montana shed 10c to $3.84.

Fisher and Paykel shed 5c to $7.85, Tranz Rail was down 2c at $3.58, INL lost 2c to $3.25 and Sky TV was down 5c at $3.25.

Falls outnumbered rises 42 to 37 on 125 stocks traded.

- NZPA