NZ shares sink as investor fear prevails

The New Zealand sharemarket tumbled nearly 1 percent as fear again gripped financial markets and investors headed to safe havens. It was a grim backdrop for tomorrow's Government budget.

Investors "smelt fear" in a move by Germany to ban short-selling of certain financial instruments, while in New Zealand investors were sensitive to references to fragile global markets in a Reserve Bank of New Zealand financial stability report today.

The benchmark NZX-50 index closed down 29.8 points, or 0.946 percent, at 3121.875. The Australian sharemarket was down 1.5 percent as the local market closed.

"Markets are running scared, with fear becoming the dominant driver," said Ben Potter market strategist at IG Markets.

"At the end of the day, nobody knows how this whole situation is going to play out. Markets hate uncertainty, which is what's driving the fear," he said.

"It seems to no longer be a question of will European nations default, but rather how will the massive austerity measures affect European Union growth rates, spending levels and company fundamentals, both locally and globally."

Fletcher Building fell 4c to 812, Contact Energy fell 9c to 601, and TrustPower closed flat at 721.

Ryman Healthcare was unchanged at 214 after reporting a realised profit of $61 million for the year today, up 16 percent from last year. Infratil was unchanged at 169.

It reported a positive annual result yesterday, and forecast increased earnings. Telecom shares fell 2c to 205, Auckland Airport fell 5c to 192, and Port of Tauranga fell 1c 684.

NZ Refining fell 11 to 332 on a day in which it reported healthy margins in the March and April. The Warehouse rose 5c to 354 after sliding 6c yesterday as it reported a nearly 2 percent drop in third-quarter sales.

Hallenstein Glassons rose 2c to 340. Sky City fell 3c to 293 and Sky TV also lost 2c, to 472. NZX fell 2c to 171 on a day it was announced that senior executive Geoff Brown has resigned.

The property sector is eager to see what tax policy the Government has decided on in the budget. ING Medical Property fell 2c to 121, Goodman Property fell 1c to 95 and ING Property fell 2c to 74.

In the United States, the market sank on Tuesday, driven lower as the strengthening of financial regulation from Wall Street to Frankfurt crushed bank stocks, adding worries about the sustainability of the global economic recovery.

The Dow Jones industrial average fell 114.88 points, or 1.08 percent, to 10,510.95. The Standard & Poor's 500 Index lost 16.14 points, or 1.42 percent, to 1120.80. The Nasdaq Composite Index shed 36.97 points, or 1.57 percent, to 2317.26.

- NZPA