NZ shares rise led by NZOG

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New Zealand shares rose, led by New Zealand Oil and Gas after it bought a cornerstone stake in ASX-listed Cue Energy. Fletcher Building and Sky Network Television advanced as dual-listed stocks followed the Australian bourse higher. Kathmandu Holdings tumbled after it flagged poor sales across the Tasman, its largest market.

The NZX 50 Index gained 13.989 points, or 0.3 percent, to 5541.739. Within the index, 22 stocks rose, 18 fell and 10 were unchanged. Turnover was a smaller than usual $86.2 million.

New Zealand Oil & Gas climbed 4.2 percent to 62.5 cents after the listed exploration company acquired 19.99 percent of ASX-listed Cue Energy for A$13.96 million from Todd Petroleum Mining, gaining exposure to the Maari field.

"I'm sure it was the little stake in the Maari field that NZO thought was looking cheap," said Matthew Goodson, managing director at Salt Funds Management. "They've generated an enormous amount of cash out of Tui, and that will continue to operate for many years to come but it's firmly in decline mode now."

Across the Tasman Australia's S&P/ASX200 Index surged 1.5 percent in afternoon trading, extending last week's gains after economic growth figures for the September quarter were the lowest in three-and-a-half years, leading markets to speculate the Reserve Bank of Australia may have to cut interest rates. Income paying equities gain in a low interest rate environment.

Dual-listed stocks gained. Fletcher advanced 1.2 percent to $8.25. Sky TV climbed 3.3 percent to $6. Auckland International Airport increased 1.4 percent to $4.425. Australia and New Zealand Banking Group rose 1.4 percent to $33.65. Westpac Banking Corp gained 1.2 percent to $34.40.

"There's a relief rally surge in Australia," said Goodson. "We're starting to see from several of the Australian economists views that the RBA will need to cut rates next year given the weakness of their domestic economy."

Kathmandu was the worst performer on the day sliding 21 percent to near a two-year low of $2.20 after the outdoor equipment retailer reported a slowdown in sales growth after a subdued start to Christmas shopping in its Australian market.

"Basically it's a profit downgrade but they don't say by how much," Rickey Ward, New Zealand equities manager at JB Were said. "The trading update alludes to Australia showing further signs of deterioration and no imminent sign of improvement. Given a large portion of their earnings come from Australia it has taken a bit of a tumble on that."

Kiwi Property Group, formerly Kiwi Income Property Trust, fell 2.4 percent to $1.225 after it said it has agreed to buy the Apex Mega Centre opposite its flagship Sylvia Park mall for $64 million as it expands its retail footprint.

DNZ Property Fund was unchanged at $1.89. The property investor's plans to further expand its Westgate Mall into land opposite the site are being opposed by former landowner Westgate Town Centre Limited, which disputed its right to the development. DNZ said the initial cost of Westgate stage two would be $30 million.

Guinness Peat Group dropped 3.6 percent to 40.5 cents after it said it has received a warning notice over its Coats Pension Plan from the UK Pensions Regulator over the level of support for the superannuation scheme, which looks set to further delay its transition to the UK threadmaker.

Outside the benchmark index, PGG Wrightson rose 1.1 percent to 45 cents. The rural services firm controlled by China's Agria Corp affirmed expectations for earnings growth in 2015 but is seeing "signs of softness" after Fonterra Cooperative Group cut its forecast farm gate payout. It expects operating earnings before interest, tax, depreciation and amortisation in the year ending June 30, 2015 to be above the $58.7 million it reported in the 2014 year.

"The thing about PGW is they do have a reasonable spread of business. It's not just a dairy servicing company, they have a reasonable spread across beef and sheep," Goodson said.

Abano Healthcare gained 1.4 percent to $7.50. The listed healthcare investor boosted first-half profit 51 percent to $3.5 million on increased revenue from its dominant dental business and a turnaround at its unprofitable audiology businesses.

Smiths City rose 3.8 percent to 55 cents after the retailer more than doubled first-half profit to $4.3 million after recognising a $2.9 million insurance payment.