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MARKET CLOSE: NZ stocks rise; Pumpkin Patch, NZOG gain

Wednesday 5th November 2008

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New Zealand stocks rose, pushing the NZX 50 Index to its fifth gain in six days after Pumpkin Patch said it reduced debt to help cope with a downturn and New Zealand Oil & Gas found a customer for its Kupe gas.

The NZX 50 rose 41.802, or 1.5%, to 2886.112 and has added some NZ$2.3 billion to its market value in the past six days, amid optimism credit markets are starting to thaw and the global financial rout may abate. Children's clothing chain Pumpkin Patch jumped 8%, Fletcher Building advanced 6.9% and New Zealand Oil & Gas climbed 6.1%.

The gains follow a rally in stocks on Wall Street and in Europe on optimism the credit freeze is starting to thaw and on prospects of Democrat Barack Obama winning the presidential race. Obama won the race to become America's 44th president after John McCain conceded.

Australia's S&P/ASX 200 Index gained 2.9% to 4336.60. Incitec Pivot, Goodman Group and Alumina all advanced more that 10%. The Australian Stock Exchange's own shares gained 9.8%. Insurer AMP fell 1.7% after selling new shares at a discount to shore up its capital. The Nikkei 225 Index was 3% higher in midday trading.

"Sentiment is improving," said Paul Robertshawe, who manages about NZ$300 million at Tower Asset Management. "Valuations are better than they have been for a long time. It may be not a rapid recovery but the planks are in place."

Pumpkin Patch today said it took advantage of currency hedge gains to pay down debt. Bank debt will be between NZ$30 million and NZ$40 million by July 2009, down from the company's previous estimate of NZ$60 million to NZ$70 million, chief executive Maurice Prendergast said. The shares rose 8 cents to NZ$1.08, trimming its plunge this year to about 62%.

New Zealand Oil & Gas jumped 8 cents to NZ$1.40 after agreeing to supply LPG from the Kupe field to Vector Ltd., New Zealand's biggest electricity and gas distributor, for at least 10 years. The shares also are being boosted by perceptions that the oil producers' cartel, OPEC, will make more concerted efforts to cut output to underpin the price of oil.

"Compliance in OPEC looks to be relatively disciplined this time," Robertshawe said. "Members are being a bit more disciplined."

Vector gained 1% to NZ$2 and is down 10% this year. Fletcher Building gained 6.9% to NZ$6.24, helped by the decision of Australia's central bank yesterday to slash its benchmark interest rate more than expected, which may revive construction activity and demand for its building products.

AMP, Australia's biggest provider of pension plans, was unchanged at NZ$6.70 while its Australian shares fell 1.5% to NZ$5.89. The insurer today raised A$450 million selling shares at an 11% discount and plans to raise as much as A$100 million more in an offer to retail investors.

"Everyone got scaled back," said Tower's Robertshawe, who bought shares in the sale. "For a company that apparently doesn't have problems to offer an 11% discount is quite attractive."

Auckland International Airport rose 1.1% to NZ$1.83 after raising NZ$130 million selling bonds to retail investors, in a sign the global credit crunch hasn't dimmed demand for investment grade debt.

"We see the strength of demand for the offer as a strong signal that investors view Auckland Airport as a relatively safe port in an economic storm," said Jason Dale, Auckland Airport chief financial officer.

Juice-maker Charlie's Group Ltd. jumped 17% to 14 cents after the company said it has launched its brand in Australia after setting up a production facility in South Australia.


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