Telecom takes toll on index

The battle for winery Montana drove its share price higher yesterday, while second thoughts over Telecom's alliance announcements last week pushed the sharemarket's biggest stock down.

The NZSE-40 capital index ended down 10.29 points at 2080.63.

Smaller stocks fell sharply, and the NZSE-SCI capital index lost 75.66 points to close at 5188.95.

Despite corporate action in a number of stocks, turnover was a light 26.19 million shares worth $63.77 million. Telecom accounted for $17.84 million and Montana $15.17 million. Though the main index was down, rises outnumbered falls 57 to 37.

Montana finished up 15c at $4.75, with Australasian brewer Lion Nathan holding 52 per cent and seeking 5 per cent more after filing a notice following the close of play increasing its offer price range to $4.65-$5.05cps, from $3.95-$4.70. It can start buying tomorrow.

Lion Nathan shares were unchanged at $5.05.

ABN Amro's Nigel Scott said the market believed that Allied Domecq wanted 10 per cent and Lion's target was 55 per cent. "The game is on to get to those figures first."

People were unlikely to hold out too long for an escalation in price because as soon as one party hit its target the game was over.

Elsewhere, Telecom fell 16c to $6.09 after last week's disappointing third-quarter profit, and announcements of an Australian mobile phone alliance with Hutchison and a deal with software giant Microsoft over its internet portal Xtra.

"People are taking time to assess Friday's announcements ," Credit Suisse First Boston's David Price said.

Fisher and Paykel, led by chief executive Gary Paykel, continued its strong rise to record highs, ending up 17c at $9.35.

"We still see plenty of upside left in that stock," Mr Price said.

It was increasingly being re-rated more towards the valuation of the highly profitably healthcare operations as opposed to being seen primarily as a whiteware maker.

Also, the market expects good results from it in the first week of June after strong whiteware sales figures in Australia.

It is also expected to announce more details on the sale of about one-fifth of new company Fisher and Paykel Healthcare Corp.

Upmarket department store Kirkcaldies saw out its debut very lightly traded with sales from $4.70 to $4.81.

Mr Price noted people who wanted to buy had been able to do so previously on the grey market so the light trade on debut was not significant. However, the listing should make the stock more prominent.

Northland Port reported an 80 per cent fall in net profit for the year to March 31, reflecting a loss from the disposal of its engineering business. No final dividend will be paid. The shares ended down 6c at $1.76.

- NZPA