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Sharemarket falls as oil prices rise on supply worries

Wednesday 2nd March 2011

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The New Zealand sharemarket fell quickly in early trade, after stocks in the United States dropped as oil prices shot up on worries about supply disruptions, fanning concerns about a dampening effect on economic growth.

Around 10.15am the benchmark NZX-50 index was down 9.78 points to 3374.61, having gained 13.9 points yesterday.

Fletcher Building (NZX: FBU ) shares were down 16c to $5.8, having lost 3c yesterday, after a shareholder and member of the founding family of Australia's Crane Group urged fellow investors to reject Fletcher's takeover offer ahead of a March 11 bid deadline.

Telecom (NZX: TEL ) shares fell 2c early to $2.13 giving up some of the 7c gain made yesterday, while among other key stocks Contact Energy (NZX: CEN ) fell 2c to $6.15.

Sanford (NZX: SAN ) was down 4c early to $5.00, Kathmandu Holdings (NZX: KMD ) lost 5c to $2.04, Steel & Tube (NZX: STU ) was down 4c to $2.56, and Mainfreight (NZX: MFT ) shed 3c to $8.11.

OceanaGold (NZX: OGC ) added 10c to $3.65 and The Warehouse (NZX: WHS ) was up 2c to $3.47.

In the US, concerns that rising oil prices could hurt economic recovery prompted investors to sell stocks and hedge against further declines.

The CBOE Volatility Index VIX, Wall Street's so-called fear gauge, jumped 13.3% to 20.79 on growing uncertainty about oil.

Brent crude oil pushed back above US$115 a barrel as supply disruptions persist and unrest spreads in the Middle East and North Africa.

On preliminary figures, the Dow Jones industrial average dropped 1.4% to 12,057.72, the Standard & Poor's 500 Index dropped 1.6% to 1306.28, and the Nasdaq Composite Index dropped 1.6% to 2737.41.



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