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MARKET CLOSE: NZ shares snap 3-day slide; WBC, ANZ gain, GPG falls

Monday 10th May 2010

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New Zealand shares rose, snapping a three-day slide, after governments in the euro zone agreed to lend as much as 750 billion euros to member states drowning under their debt, stoking optimism the Greek fiscal crisis won’t spread significantly. Westpac Banking Corp. led gains in lenders.

The NZX 50 Index rose 11.77, or 0.4%, to 3170.62, having tumbled 4.2% in the previous three sessions, slicing $1.5 billion of its market value. Within the index, 29 stocks rose, 12 fell and nine were unchanged. Turnover was $109.7 million, with trading in Fletcher Building and Telecom notable.

Equity markets rebounded across Asia today, the euro revived and prices of raw materials advanced on news of the European rescue package. Some US$3.7 trillion was wiped off the value of global equity markets last week, according to Bloomberg, on fears Greece’s debt crisis would spread.

“In the short term people have a bit more confidence than they had last week,” said Stephen Walker, head of asset management at Goldman Sachs JBWere (NZ). “Europe’s taken some steps to relieve the pressure and re-establish some confidence in their overall structure and I think that will remove some of the more panicky-type views and doomsday views.”

Westpac rose 3.3% to $31.31 and Australia & New Zealand Banking Group advanced 2.1% to $29, mirroring gains in Australian lenders. Australian pension plan provider AMP  gained 2.2% to $7.40.

New Zealand Oil & Gas rose 2% to $1.50 after crude oil gained for the first time in five days, pacing an advance in resources. New York crude climbed as much as 2.4% to US$76.94 during Asia’s day.

Pan Pacific Petroleum rose 3.2% to 32 cents.

NZ Farming Systems Uruguay, which develops dairy farms in South America, rose 5.4% to 39 cents, having sunk to a 14-month low of 37 cents last week. PGG Wrightson, New Zealand’s biggest rural services company, rose 1.9% to 53 cents, from 52 cents last week, the lowest since November 2009. The two companies have been hurt by speculation the holdings of Rural Portfolio Investments will come onto the market with that company in receivership.

Guinness Peat Group fell 3.4% to 85 cents on disappointment the investment group didn’t announce a ‘value return’ to shareholders at their annual meeting in London on Friday, as it had intended. Chairman Ron Brierley said GPG was “making progress and will continue to do so,” he said. “In terms of GPG's 20 year history, a few more weeks, or months, if necessary, is not critical.”

“Brierley in the early days was a company that attacked asset-rich companies which were not maximising the value,” Goldman Sachs JBWere’s Walker said. “The favourite target was companies with some characteristics of conglomerates, which is exactly what GPG has become.”

Fisher & Paykel Appliances Holdings fell 1.6% to 62 cents after the only home appliance maker on the NZX said it plans to take impairment charges over its assets of up to $26.5 million in its full-year result. At the time of its first-half results in November, FPA forecast a full-year net loss of $58 million to $65 million, reflecting charges against its North American business.

Walker said he isn’t overly concerned or surprised with the charges, given the range of assets the company has around the world. “It’s making money and capex has been fairly light, so it is producing cash flow,” he said.

Telecom fell 0.9% to $2.11. Vodafone New Zealand will team with Canada's Axia NetMedia to bid for participation in the government's planned ultra-fast broadband initiative. State-owned Crown Fibre Holdings is mulling more than 30 proposals to participate in its $1.5 billion broadband initiative.

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