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MARKET CLOSE: NZ shares fall, led by Westpac, banks amid Greece rescue doubts

Monday 17th May 2010

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New Zealand shares fell for a second day amid concern Europe’s 750 billion euro debt bailout fund won’t be enough to avert a crisis or prevent the regions sliding back into recession, choking off demand and sapping investor appetite for equities. Westpac Banking Corp. led the decline.

The NZX 50 Index fell 20.26, or 0.6%, to 3170.74. Within the index, 37 stocks fell, five rose and eight were unchanged. Turnover was $83.6 million.

Equity markets weakened across Asia today, with Japan’s Nikkei 225 Index falling 2.4% to 10213.91 and Australia’s S&P/ASX 200 Index down 2.6% to 4491. That followed a 1.9% drop in the Standard & poor’s 500 in New York on Friday and declines of more than 3% on benchmark indexes in France, Germany and the UK.

Westpac fell 3.9% to $30.12 on the NZX, while Australia & New Zealand Banking Group declined 3.6% to $27.73 and AMP, Australia’s biggest provider of pension plans, sliding 2% to $7.30.  Financials tracked declines in the ASX-listed counterparts.

“There’s absolutely no confidence in the bailout package,” said Ben Potter, market strategist at IG Markets in Melbourne. “People are starting to ask questions about how much earnings are going to have to be cut for the euro-zone entering another recession.”

Kathmandu Holdings, the outdoor equipment chain, fell 3.8% to $2.05, the lowest since mid-February. PGG Wrightson, the nation’s biggest rural services company, declined 3.5% to 55 cents and Pyne Gould Corp. fell 2.2% to 45 cents.

NZ Farming Systems Uruguay rose 5% to 41 cents, leading the handful of gainers higher after reiterating its target for a full-year loss, saying higher prices will make up for milk production that will undershoot its forecast.The company that’s managed and part-owned by PGG Wrightson Ltd. expects to report an EBIT loss of not more than US$10 million, even though milk production will be 10% to 15% short of 80 million litres, which was the bottom of its forecast range.

New Zealand Oil & Gas fell about 2% to $1.50 as fears about Europe’s sovereign debt crisis drove the price of crude oil down for a fifth day.

New York crude for June delivery sank as low as US$69.82 a barrel on the New York Mercantile Exchange.

New Zealand Refining fell 2.3% to $3.42.

NZX, the stock market operator, fell 1.7% to $1.72 after the company reported a 3% decline in first-quarter earnings as acquisitions pushed up operating costs more than revenue. Net income fell to $2.9 million in the three months ended March 31, from $3 million a year earlier, the Wellington-based company said in a statement today. Operating revenue jumped 46% to $11.9 million.

Wellington Drive Technologies soared 24% to 9.9 cents after the manufacturer of energy efficient motors for commercial fridges agreed a distribution with A.O. Smith, one of the biggest U.S. electric motor makers. Smith will sell Wellington Drive’s ECR One and EC85/95 refrigeration motors used in supermarket display cases and bottle coolers, co-branded with its own range, the Auckland-based company said in a statement today. 

Among other stocks, clothing retailer Hallenstein Glasson Holdings fell 1.8% to $3.35 and Auckland International Airport, the nation’s busiest gateway, rose 1% to $1.98.

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