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MARKET CLOSE: NZ shares join global sell-off

Friday 29th January 2010

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New Zealand shares fell, joining a global slide amid renewed concern Greece will need a bail-out while economic recovery in the US remains tepid and China looks to tighten credit.

The NZX 50 Index fell less than its counterparts in Asia as companies including Hallenstein Glasson (NZX: HLG ) forecast better earnings.

The NZX 50 fell 18.95, or 0.6%, to 3165.65, the lowest since December 21 and the 13th decline in 15 sessions. Within the index, 21 stocks fell, 20 rose and nine were unchanged. Turnover was $88.9 million.

Equity markets sank across Asia following a sell-off on Wall Street. Japan’s Nikkei 225 Index was down 1.4% in early afternoon trading. Hong Kong’s Hang Seng fell 0.8% and Australia’s S&P/ASX 200 Index dropped 2.2%.

“In China, a big part of the concern is a focus on China tightening,” said Angus Gluskie, who manages US$300 million at White Funds management in Sydney.

Worldwide, “we’re steadily seeing improvement – in 12 months time economies are likely to be in a better position than they are today,” he said. “People are fretting about small bits of the news flow but on down days there’s a reasonable level of buying on the dips.”

New Zealand Refining (NZX: NZR ) led the NZX 50 lower. New Zealand Oil & Gas (NZX: NZO ) shed 2.6% to $1.52 and Pan Pacific Petroleum (NZX: PPP ) dropped 2.3% to 43 cents.

Pike River Coal (NZX: PRD ), which has flagged the need for more capital amid further production delays, declined 3.1% to 95 cents.

Valuations in the resources sector “have looked very full,” Gluskie said. With the US dollar rising on speculation the Federal Reserve will begin tightening policy and the prospects of dampers being put on China’s growth, “there’s a negative trend developing” for commodities, he said.

Kathmandu Holdings (NZX: KMD ) fell about 2% to $2 as Westpac (NZX: WBC ) disclosed that it has ceased to be a substantial holder of the stock, with its stake dropping to 3.1% from 6.3%.

Pumpkin Patch (NZX: PPL ) fell 2% to $1.96. Hallenstein surged 11% to $3.60, leading gainers on the NZX 50 after the clothing retailer forecast a 50% jump in first-half profit on buoyant trading over the Christmas-New Year period and raised its dividend.

“We have experienced consistent demand from our customers to our offer during this key trading period, and we have been able to protect and grow our margin,” chairman Warren Bell said.

Charlie’s Group (NZX: CLA )  jumped 7.8% to 9.7 cents after reporting it turned to a first-half profit, from a year-earlier loss, on the sale of an Auckland property, cost cutting and growth in its Australian business. “We’ve been working pretty hard on turning the business around,” chief executive Stefan Lepionka told BusinessWire.” 

NZ Farming Systems Uruguay (NZX: NZS ) rose 4.6% to 46 cents after reiterated its target for a full-year loss, saying milk prices will be volatile after three months of gains.

Telecom (NZX: TEL ) fell 1.2% to $2.38 amid negative publicity over outages on its XT network – which has been beset with glitches for three days.

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