NZ stocks: Tranz Rail hogs the spotlight

Tranz Rail shares hogged the spotlight in an otherwise flat sharemarket today.

Its shares rallied 8c to 94 at closing after a flush of interest initially took the price up 11c to 97, the highest since the end of March.

The surge in Tranz Rail's share price came after Australian transport group Toll Holdings disclosed it has built a 6.1 per cent stake in the troubled rail operator.

On Thursday Florida-based RailAmerica offered a 75c-a-share proposed bid, worth $158 million, now seen by some as too low.

Forsyth Barr broker David Price said this level of interest could send a signal to the banks that others saw value in Tranz Rail.

"They (the banks) may come out now and confirm that they are supporting Tranz Rail. That's all it really needs.

"The value is there, it's just the short term pressure that's been put on them by the banks," he told NZPA.

JB Were senior investment adviser Peter Stokes said earlier today that RailAmerica's potential bid had allowed investors to look past Tranz Rail's short term cash flow problems and consider its long term prospects.

"The 75c RailAmerica bid clearly has been a catalyst for a price re-rating," he said.

"It doesn't stand a chance of succeeding at that level, but the game is starting to get a bit interesting."

At the end of trading today the NZ50 gross index had dipped .02 points to 2009.61, and the NZSE-40 capital index was up 1.07 points at 1982.15.

Turnover was moderate at $80 million. Telecom was once again weighing heavy in the trading at $36.3 million, followed by Tranz Rail at $9.7 million.

Among the notable rises today were: Hallenstein Glasson up 14c to 289, Lion Nathan up 10c to 630, Contact Energy up 3c at 458, and Telecom up 2c at 490.

On the downside, Fisher and Paykel Healthcare, due to report its half-year result on Thursday, shed 20c to 1050. Fisher and Paykel Appliances dropped 14c to 1065, and INL dipped 2c to 406.

At day's close there were 38 rises and 58 falls from the 139 stocks traded.

- NZPA