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MARKET CLOSE: NZ stocks falls on global recovery fears

Wednesday 30th June 2010

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New Zealand stocks fell to the lowest level in almost a year, marking seven straight days of declines, as the gloom on international markets spread locally amid fears that that the recovery of global markets may be short-lived.

Dual-listed APN News & Media (NZX: APN ), paced decliners, with Kathmandu (NZX: KMD ) and Nuplex (NZX: NPX ) following suit.

The NZX 50 fell 18.98 points, or 0.6%%, to 2,972.1. Within the index, 27 stocks fell, 10 rose and 13 remained flat. Turnover was $68.5 million.

Asian stocks took their lead from the US, where the Standard & Poor's 500 Index fell 3.1% overnight, as concerns around China’s growth prospects and the weakness in the global recovery weighed on markets. In intraday trade, Japan’s Nikkei fell 2% to 9375.7 while Hong Kong‘s Hang Seng index was off 0.5% at 20129.3.

“There is widespread concern that there is going to be a double-dip in the recovery,” said Alan Moore, who helps manage $600 million for Milford Asset Management Ltd. “It does seem to be a bit overdone from an Australasia perspective, but it also happens to be last day of the quarter and end of the financial year in Australia, which has helped weaken things locally.”

Pacing the decline on the NZX 50, dual-listed APN News fell 6.9% to $2.43. Kathmandu, the outdoor clothing retailer, fell 4.7% to $2.05 and Nuplex, the chemical and resin maker, fell 3.8% to $2.81.

ANZ (NZX: ANZ ) dropped 2.9% to $26.50, while Westpac (NZX: WBC ) fell 2.3% to $26.05.

Gas explorer and producer L&M Energy (NZX: LME ) fell 13% to 13 cents after the company completed a placement of about A$7 million to raise funds to develop its coal seam gas project in Southland.

The company sold about 77 million shares at 9 Australian cents apiece to institutional and sophisticated investors in what it said reflected strong support for its strategy for developing coal seam gas in New Zealand.

NZ Farms Systems (NZX: NZS ) rose 5% to 42 cents, pacing gains on the day. Shares in Cavalier (NZX: CAV ) rose 4.3% to $2.45 and NZX (NZX: NZX ) rose 2.8% to $1.49.

Shares in Allied Farmers (NZX: ALF ) rose 11% to 4 cents after the finance company, which took on the Hanover and United loan books, accused Hanover Finance of breaching their agreement and plans to take legal action.

“Assessing the loan book was a very difficult task because it was very complicated book,” Moore said. “So it is not surprising that some problems seem to have come to light now that each individual item has been looked at.”

Skellerup (NZX: SKL ) rose 7.9% to 68 cents after it boosted its forecast full-year profit to between $10 million to $11 million, including a one-time charge of $2.4 million. It said the increase was due to a pickup in its Industrial division in the second half.

Wakefield Health (NZX: WFD ) was unchanged at $6.90 after the private hospital owner’s offer for Norfolk Investments failed for a second time after failing to garner enough support from the target company. Norfolk is part-owner of Grace Hospital in Tauranga.

Shares in Telecom (NZX: TEL ) were flat at $1.89 after it launched a charm offensive to garner investor support for a proposal to carve out of its profitable network business and tap the government’s $1.35 billion fund to roll-out high-speed internet.

Guinness Peat Group (NZX: GPG ) was unchanged at 66 cents after a tumultuous week in which director Tony Gibbs was sacked for speaking out against a proposal to split its Australian unit into a separately listed company.

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