NZ stocks: Tower plummet drags NZSE-40 index with it

6.00pm

The New Zealand sharemarket dipped into negative territory today after a profit warning from top forty stock Tower Ltd sparked a frenzied sell-off.

Tower, New Zealand second-biggest fund manager, had 44 per cent of its $621 million value wiped off today in a savaging akin to market maulings overseas this year.

That saw the benchmark NZSE-40 index edge down 3.51 points to 2036.19 on strong turnover for a Monday worth $74 million.

Tower fell $1.57 to end on its session low of $1.98 after directors cautioned after the market closed on Friday that instead of a $50 million-70 million annual profit expected by analysts, it would post a $30-40 million loss.

Tower had traded at $3.55 before the company requested a suspension on Thursday ahead of the warning.

ASB Securities broker Stephen Wright said at this price Tower could attract a takeover offer.

"They've beaten would-be suitors off over the years saying they were strong enough to survive on their own, but clearly they're not.

"Maybe we'll see some corporate interest at some stage," he said.

He expected today's selling frenzy to continue for a couple of days.

"In the absence of any positive news the downward momentum will just feed on itself."

Outside of Tower the broader market performed quite well today.

Top stock Telecom, buoyed by portfolio buying and a strong run in the telco sector in New York on Friday night, closed up 8c at 522 on shares worth $25 million.

Biotech Genesis added 2c to 158 after directors talked up its prospects at the firm's annual meeting on Friday, while Tranz Rail rose 7c to 149 as investors digested plans to restore Tranz Rail's finances, including a $60 million rights issue.

BIL International closed up 2c at 62c after a London paper speculated that investment company Orb Estates was preparing to snap up BIL's 46 per cent stake in British hotel chain Thistle.

Orb, based in the island tax haven of Jersey off the south coast of England, bought 37 of Thistle's 58 hotels earlier this year in a sale and leaseback deal.

The Fisher & Paykel stocks traded strongly in anticipation of good interim results -- due out this week. F&P Healthcare closed up 6c at 1125 while F&P Appliances added 5c to 1100.

In other moves, Baycorp Advantage added 13c to 330, Carter Holt Harvey was up 3c at 173, Fletcher Building added a cent to 307, Ports of Auckland rose 5c to 630, Sky TV added 2c to 364 and WestpacTrust jumped 56c to 1571 on the back of a strong run by its Australian parent.

On the flipside, discount retailer The Warehouse was down 5c at 744, Sky City eased 4c to 761 , Air New Zealand dropped 2c to 52c and Auckland International Airport slipped a cent to 538.

- NZPA