KEY POINTS:
The sharemarket plumbed new three-year lows today despite a mildly positive start, succumbing to pressure from offshore markets and worse than expected inflation.
The benchmark NZSX-50 index closed down 39.7 points, or 1.3 per cent, at 3040.5. Turnover totalled a hefty $291.8 million, of which $206 million was in Telecom.
United States stocks fell overnight on more concerns about the health of the banking sector, and credit worries then pushed Australian stocks down 2 per cent to a two-year low.
In New Zealand, the market had been expecting annual consumers price inflation of around 3.8 per cent, and Reserve Bank rate cuts as early as next week, but the biggest quarterly rise in 18 years pushed annual inflation higher than forecast.
"But with inflation ticking up to 4 per cent, there's probably a little bit less room for them (RBNZ) to move as early as that," said David Le Breton of ASB Securities.
Top stock Telecom dipped to 326 before closing down a cent at 331.
"There's been fairly big volume through today which would indicate a bit of possibly offshore interest, and given that it has been sold down a fair bit recently there could be some offshore interest in it at these prices," Mr Le Breton said.
Second-ranked Contact Energy slid 26c, or 3.5 per cent, to 714. The stock soared to a high of 1015 in early May on the back of a bid for majority owner Origin Energy by Britain's BG Group, which was rejected then revived as a hostile takeover.
BG has indicated it will offload Contact if the Origin bid is successful.
Fletcher Building fell 20c to 605, ahead of its annual result due soon.
"Given the abrupt slowdown in the housing sector and building and construction, (investors) anticipated perhaps that result will be impacted by that," Mr Le Breton said.
Among other top-10 stocks, Fisher & Paykel Healthcare was down 3c at 227, F&P Appliances was flat at 195, Sky City was down 6c at 296, Sky TV rose 2c to 417, Auckland Airport fell 5c to 185, and Infratil rose a cent to 193.
The Warehouse was up 4c at 390, Hallenstein Glasson gained 2c to 265, Mainfreight rose a cent to 633, Freightways was up 4c at 300, and Cavalier rose 3c to 218.
Most other top-50 stocks were negative, with some of the largest falls in Rakon, down 13c at 265, NZX, down 15c at 695, PGG Wrightson, down 5c at 250, and Pike River Coal down 6c at 210.
Dual-listed stocks were hit harder, with ANZ down 56c at 2185, Westpac down 73c at 2367, and AMP off 44c at 783.
Australia's S&P/ASX 200 Index was down 1.96 per cent at 4824, and Japan's Nikkei share average fell 1.8 per cent.
- NZPA