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MARKET CLOSE: NZ shares rise for third day; Mainfreight, Tower, Fletcher gain

Friday 28th May 2010

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New Zealand shares rose for a third straight session as investors, joining a rally that started in Europe after China scotched a report it plans to exit its euro-debt holdings. Mainfreight (NZX: MFT ) rose after its full-year results yesterday and Tower (NZX: TWR ) was up on its resumption of interim dividends.

The NZX 50 Index rose 12.91, or 0.4%, to 3047.74, extending its gains from the 10-month low it plumbed on Tuesday. Within the index, 25 stocks rose, 14 fell and 11 were unchanged. Turnover was $78.9 million.

The Standard & Poor’s 500 Index jumped 3.3% in New York and in Asia today, Japan’s Nikkei 225 was up 1% and Hong Kong’s Hang Seng rose 1.8%. Australia’s S&P/ASX 200 index rose 1.5%. China reaffirmed its commitment to invest in Europe after the Financial Times said the world’s third-biggest economy wanted to reduce its exposure. The Chicago Options Board Exchange’s Volatility Index, or VIX, commonly referred to as Wall Street’s ‘fear gauge’, plunged 13% to 29.68 overnight.

China “relieved some fears overnight” about its investments in Europe and US data “is all reasonably positive at this stage,” said Grant Williamson, a director at Hamilton Hindin Greene in Christchurch. The tumble in the local bourse earlier this week “brought out a few bargain hunters,” he said.

Westpac Banking (NZX: WBC ) rose 6.2% to $29.62, reflecting gains in Australian lenders on the ASX. ANZ (NZX: ANZ ) rose 3.9% to $28. AMP (NZX: AMP ) advanced 4% to $6.95.

Mainfreight, New Zealand’s biggest trucking company, gained 4% to $6.20, a day after it reported that it had eked out a 2.5% gain in full-year profit as it cut costs and took less in one-time charges, making up for a decline in sales. The company had a pickup in the fourth quarter which carried through into the current three-month period.

“Analysts have been reading the outlook for Mainfreight and the positive comments from management,” Williamson said. The company offers investors very good overseas exposure, particularly in the U.S., which has “a lot of potential” even though it is a tough market now.

Tower rose 2.7% to $1.89 after the insurer and fund manager part-owned by Ron Brierley’s Guinness Peat Group (NZX: GPG ) announced its first interim dividend in eight years after a turnaround in the value of its equity and property portfolios underpinned a surge in revenue. Net profit climbed 5.6% to $28.1 million.

Fletcher Building (NZX: FBU ) rose 2.4% to $8.12.

New Zealand Oil & Gas (NZX: NZO ) climbed 2.9% to $1.41 and Pan Pacific Petroleum (NZX: PPP ) rose 3.9% to 27 cents as crude oil headed for its first weekly gain in four.

Allied Farmers (NZX: ALF ), the finance company that bought Hanover Finance’s loan books in a debt-for-equity swap last year, slipped 7.8% to 5.9 cents after it announced it has lifted its expected impairment charge on the loans to $51.5 million, and still has a third of the book to revalue. 

Heritage Gold (NZX: HGD ) fell 3.6% to 2.7 cents after announcing a 77% decline in full-year revenue, resulting in a loss of $471,864. 

Michael Hill international (NZX: MHI ) was the biggest decliner on the NZX 50, falling 2.8% to 69 cents.

Fisher & Paykel Appliances (NZX: FPA ) ended the day unchanegd at 55 cents after posted a 47% drop in full-year earnings, reflecting weaker sales and unfavourable currency movements, meeting its guidance after a pickup in trading in the second half. One-time impairment charges pushed the net result to a loss.

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