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Trading dominated by slides in New Zealand Oil & Gas and Telecom

Monday 14th June 2010

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New Zealand shares closed in marginally positive territory after languishing for most of the day in the red on a day marked by light trading due to the Labour Day holiday in Australia.

The NZX 50 gained 1.40, or 0.05%, to close at 3042.66, marking a cool down in activity after previous days of consecutive gains. Within the index 23 stocks rose, 15 fell and 9 remained unchanged. Turnover was $44.2 million.

Despite the index closing in the black, the market was dominated by its downside.

New Zealand Oil & Gas (NZX: NZO ) lost the most value, falling 4.9% to close at $1.36 after announcing that its Tui SW-2 oil well would not be commercially viable.

“The well doesn’t have a huge impact on the company,” said Stephen Walker, portfolio manager at Devon Funds Management. “When it was announced that they were exploring the well the stock rose 5 or 6%. With today’s announcement that it is not commercial, they are just giving that back.”

Telecom (NZX: TEL ) was another notable decliner on the day, with the shares accounting for most of the turnover on the index.

The stock slid 1.6%, to close at $1.88, driven largely by the company’s structural split and its prospects becoming a partner with government in the ultrafast broadband initiative.

“Telecom was down most of the day on news that Crown Fibre Holdings had finished assessing bids, which is seen as being possibly negative for the company,” said Walker.

Reports out of Australia suggest the company could exit its AAPT ownership by August.

Among the main NZX 50 gainers on the day were Steel & Tube Holdings (NZX: STL ) rose 2.1%, to $2.45.

Nuplex (NZX: NPX ) rose 2.1% to $2.99, and Fisher & Paykel Appliances (NZX: FPA ) rose 1.7% at $5.94.

Contact Energy (NZX: CEN ) rose 1.7% to $5.94.

PGG Wrightson (NZX: PGW ) fell 3.6% to 54 cents after meat processor Silver Fern Farms announced the closure of two operations in Canterbury, citing a drop in the number of lambs available for slaughter.

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