NZ sharemarket starts well

NZPA

Tuesday 16th August 2011

The New Zealand sharemarket followed its 1.1 percent gain yesterday with a strong opening today after equities around the world climbed further away from last week's deep hole.

Global stocks were boosted by news that Japan's economy shrank less than anticipated in the second quarter as companies made strides in restoring output following a devastating earthquake and tsunami.

News that Google Inc offered to buy Motorola Mobility Holdings Inc for about $US12.5 billion in cash also fuelled a rebound in US stocks for a third straight session.

Around 10.15am the benchmark NZX-50 index was up 30.51 points or 0.9 percent, after closing up 36.1 points yesterday.

Fletcher Building was up 13c to 783, Cavalier Corp gained 10c to 360, Fisher & Paykel Healthcare lifted 8c to 235, OceanaGold was up 5c to 257, NZX gained 5c to 225, Telecom was up 3.5c to 258, and Contact Energy added 2c to 500.

The gains in the US meant the stomach-churning losses of last week have now been wiped out there, with banks among the big winners.

"The shining point throughout this whole debacle is that corporate America is actually doing quite well," said King Lip, chief investment officer at Baker Avenue Asset Management in San Francisco. "It shows that they're not yet ready to throw in the towel."

Acquisition activity, such as the Google offer for Motorola Mobility, is often viewed as a sign major corporations sitting on big cash piles are willing to pay for shares even as economic growth remains sluggish.

The Dow Jones industrial average shot up 1.9 percent to 11,482.90, the Standard & Poor's 500 Index gained 2.2 percent to 1204.49, and the Nasdaq Composite Index climbed 1.9 percent to 2555.20.

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