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MARKET CLOSE: NZX hits three month low on back of European worries

Wednesday 19th May 2010

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New Zealand shares fell for a fourth straight day, as Germany stepped up efforts to prevent speculators betting against its markets, stoking concern the region’s debt crisis has potential for more damage. New Zealand Oil & Gas and Fisher & Paykel Appliances (NZX: FPA ) led the decline. 

The NZX 50 index fell 29.8, or 0.9%, to 3121.87 to a three-month low. Within the index, 33 stocks declined, 11 were unchanged and six gained. Turnover was $91 million after another heavy day of trading in Telecom Corp. shares at 16 million.  

Markets around Asia declined as investors’ nerves were tested again after Germany announced it will put a ban on specific types of short selling on its own market. Japan’s Nikkei 225 was down 0.7% to 10173.65, Hong Kong’s Hang Seng sank 1.1% to 19732.15 and Australia’s S&P/ASX 200 fell 1.3% to 4412.70. 

“It’s just a question of how to weigh up the concerns about the peripheral countries in Europe” that have been plagued by weak debt profiles, said Stephen Walker, who helps manage $40 million at Devon Funds Management. “The weak global backdrop has probably has more Australians selling our market than buying which is a bias against it.” 

Oil explorer NZ Oil & Gas (NZX: NZO ) paced the decline on the index, falling 3.3% to $1.45 as commodity prices were sapped by the prospect of global growth being derailed, while Pan Pacific Petroleum (NZX: PPP ), which is part-owned by NZOG, dropped 3.1% to 31 cents.  

New Zealand Refining (NZX: NZR ) fell 3.2% to $3.32 after it said its gross refinery margin fell to US$5.55 per barrel gross refining margin for March and April from US$6.85 in January/February and US$6.34 in March and April last year.  Production through May will be reduced and margins affected by a maintenance shutdown. 

Sanford (NZX: SAN ) gained 2.3% to $4.45 as the kiwi dollar extended its slide to hold below 69 US cents, lifting the value of overseas sales.

The New Zealand dollar traded recently at 68.62 US cents, down from 69.56 cents yesterday.

The currency extended its slide after Reserve Bank Governor Alan Bollard said New Zealand could be vulnerable to any renewed deterioration in global debt markets and the sovereign debt crisis in Europe. He repeated his view that a lower kiwi dollar is desirable for the economy.

F&P Appliances sank 3.2% to 60 cents. ING Property (NZX: ING ) declined 2.6% to 74 cents the Auckland-based property investor said a write down on the value of its portfolio put it into a covenant breach over its Manawatu Business Park joint venture.  The trust posted a full-year loss of $53.7 million, down from a year-earlier $63.1 million.

Warehouse (NZX: WHS ) gained 1.4% to $3.54 after Woolworths was reported in the Sydney Morning Herald to still be interested in pursuing a takeover.

Retailer Hallenstein Glasson (NZX: HLG ) rose 0.6% to $3.40 even though the Warehouse reported soft sales yesterday.

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