MARKET CLOSE: NZ shares extend decline; Telecom, oil companies slide

Thursday 28th January 2010

New Zealand shares fell, pushing the NZX 50 Index to the lowest level in more than a month, as Telecom (NZX: TEL ) endured a second day of outages on its XT network and the price of oil fell, weighing on Pan Pacific Petroleum (NZX: PPP ).

The NZX 50 fell 9.96, or 0.3%, to 3183.60, the 12th decline in 14 sessions. Within the index, 19 stocks fell, 13 rose and 18 were unchanged. Turnover was $70 million.

Telecom shed 1.2% to $2.41. Chief executive Paul Reynolds was forced to apologise to customers and flagged the possibility of compensation after an outage on its XT network extended into a second day.

Reynolds called for an “urgent and independent” review of the new network after the company lifted customers on XT to 242,000 at the end of the first quarter, from 149,000.

Pike River Coal (NZX: PRC ) fell 2% to a two-week low of 98 cents. Forsyth Barr analyst Andrew Harvey-Green predicts the company will need to raise close to $40 million in additional working capital. The rock graben facing Pike is taking twice as long as expected to get through, which will delay the start of hydro mining, he said in a report, according to ShareChat.

Pan Pacific Petroleum, which has announced its second dry well in as many months, fell 2.5% to 44 cents as the price of crude oil weakened.

Crude fell below US$74 a barrel in New York and the March contract was recently at US$74.08. New Zealand Oil & Gas (NZX: NZO ) fell 0.6% to $1.56. New Zealand Refining (NZX: NZR ) declined 1.3% to $3.85.

Tower (NZX: TWR ) fell 2.5% to $1.95, leading the index lower. Australian insurer AMP (NZX: AMP ) dropped 1.2% to $8 on the NZX.

Stocks also weakened today as some traders detected a more hawkish tone in Reserve Bank Governor Alan Bollard’s review of the official cash rate today. While he kept the rate unchanged at 2.5% as expected and repeated a mid-year hike was likely, he firmed up his language and some in the market said this may be a warm-up to a hawkish Monetary Policy Statement in March.

PGG Wrightson (NZX: PRW ) fell 1.6% to 62 cents. Sky City (NZX: SKY ) fell 1.2% to $3.35.

Fisher & Paykel Healthcare (NZX: FPH ), which gets almost 80% of its revenue in US dollars, rose 0.6% to $3.39 as the kiwi dollar held below 71 US cents.

Xero (NZX: XRO ) rose 1.9% to $1.65, its second daily gain after yesterday announcing an agreement with Yodlee Inc, giving it access to more bank feeds to speed its global expansion.

Businesswire.co.nz

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