Telecom gains as Baycorp takes breather

Telecom shares shot up yesterday after speculation that it is looking to form alliances with Japanese giant NTT DoCoMo and Australia's Cable & Wireless Optus.

Reports have suggested that NTT DoCoMo is negotiating with C&W Optus, Australia's second-largest mobile phone operator.

But the Business Herald reported yesterday that industry insiders were saying Telecom, which owns 80 per cent of Australian telco AAPT, had also raised the prospect of linking up with the Japanese company.

Telecom is keeping quiet on the talk, but its shares rallied 19c to 746 on turnover of 3.4 million shares worth $25 million - more than a third of yesterday's total turnover.

The NZSE-40 Capital Index was up 10.43 points (0.49 per cent) to 2139.89, and the NZSE SCI Capital Index of smaller stocks also rose 25.92 points (0.48 per cent) to 5393.55.

Rises outnumbered falls 47 to 43 among the 149 stocks traded, with turnover totalling a modest $68 million.

Ord Minnett Securities institutional dealer Ian Waddell said it wasn't clear whether Telecom's rally was the direct result of the weekend speculation.

Mr Waddell said high-growth stock GDC was also a standout performer yesterday, rising 30c to 500 on 919,970 shares worth $4.5 million. That came on top of a 20c rally on Friday.

However, two of last week's stars took dives, he said.

Baycorp hit a new high on Friday, soaring 90c to $13.60 on turnover worth $4.6 million, continuing a strong upwards trend. Since the middle of May, the stock had increased 55 per cent. However, it tumbled 35c to $13.25 yesterday.

Meanwhile, Baycorp has told the Stock Exchange it knows of no reason for the recent jump in its share price to record levels.

In the company's reply, managing director Keith McLaughlin noted that "for several weeks there has been an increase in the share price, but this has been on low volumes. This pattern is not at variance to previous years where the share price has often trended up in anticipation of the profit announcement."

The market surveillance panel had written to Baycorp on Friday asking if it could explain a $1.35 jump in the price to $13.65 since August 2.

Fletcher Energy, which closed up 22c at 768 on Friday on top of a 31c jump on Thursday, came off 20c to 748 yesterday, with 1.06 million shares worth $8.1 million traded.

Mr Waddell said Baycorp and Fletcher Energy's downward turns were the result of profit-taking following last week's sharp jumps.

Fletcher Building was down 7c to 230, while Forests was steady of 87c.

Elsewhere on the market, Fisher & Paykel and Lion Nathan were both 5c weaker at 725 and 485 respectively, while Montana lost 8c to 230.

The Warehouse softened 10c to 530. After the local sharemarket closed on Friday it reported there had been delays in settling the Crazy Clint's and Silly Solly's deal.

The stock plummeted 35c on Friday after reporting its sales figures for the fourth quarter, which were not as solid as expected.

However, making gains yesterday were Tower, up 9c to 519, Sky TV, 5c to 420, and Contact, up 4c to 264.

Brierley and Frucor both strengthened 2c, to 39 and 237 respectively.

In the US on Friday, stocks rose after a tame jobs report indicated that economic growth there was cooling from its red-hot pace and lifted hopes that the Fed might leave interest rates alone later this month.

- NZPA