Resurgent Telecom drives stocks up 2pc

Bargain hunters flocked to the sharemarket yesterday, DITA DE BONI reports.

Investors eager for growth stories had plenty to coo about yesterday as the benchmark NZSE-40 index climbed 45.10 points, or 2.2 per cent, to close at 2113.01, on a healthy $129 million turnover.

The positive domestic action was set against a backdrop of international relief. Interest rate concerns in the US eased after data there suggested job growth might be weakening, taking the pressure off wage inflation. That created strong international sentiment which flowed through to the local scene.

The New Zealand market "doesn't feel like it's got a down side at the moment," said analyst Brett Wilkinson, of Ord Minnett.

"New Zealand is being perceived as a value market - at long last.

"In currency terms, it's cheap as well to offshore investors and they are starting to see the currency bottom out."

Forsyth Barr broker Suzanne Kinnaird said Telecom was getting "ridiculously cheap" at around 700c. Telecom led yesterday's market buoyancy, firming 33c to 768c.

"We've seen a bit of a change in sentiment to the whole telcos sector worldwide ... speculation is that Telecom was oversold with programme selling at the start of the week due to index changes and I think we're seeing it rebound off that."

People had been worried Telecom might be forced to pay too much at the Government's auction of the 2GHz radio spectrum that started yesterday, she said, but it now appeared expectations had lowered for what the spectrum would attract.

FCL Energy closed 24 cents higher at 716c, based on the ongoing strength of associate Capstone Turbine on the Nasdaq, which closed at $US62 on Friday after listing at $US16.

Brokers predicted there would be further value to FCL Energy from Capstone's strength.

One broker contacted said the performance of local e-stocks was disappointing, "considering how the Nasdaq has recovered."

Mr Wilkinson said investors were looking for further news from the technology sector, "but essentially they are looking more at e for earnings."