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MARKET CLOSE: NZX 50 falls, China fears weigh on resources

Monday 1st February 2010

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New Zealand shares fell, pushing the NZX 50 to a six-week low, as ongoing concerns about China’s efforts to cool its economy weighed on the resources sector. Pan Pacific Petroleum led the market lower.

The NZX 50 fell 13.68, or 0.4%, to 3150.96, with the public holiday in Auckland keeping trading subdued. Within the index, 22 stocks fell, 18 rose and 10 were unchanged. Turnover was a lower-than-average $34.3 million.

Equity markets weakened across Asia after reports showed manufacturing in China was underpinned by demand for exports, stoking speculation Beijing will increase efforts to tighten credit and cool the world’s No. 3 economy. Japan’s Nikkei 225 Index slipped 0.2% in early afternoon trading and Hong Kong’s Hang Seng fell 1.1%. Australia’s S&P/ASX 200 Index fell 0.8%.

Pan Pacific (NZX: PPP ) declined almost 7% to 40 cents, the lowest since May last year. New York crude oil for March delivery sank to US$72.51 a barrel during Asia’s day,  amid concern demand in the U.S. will be tepid and as China concerns weighed on equities. New Zealand Oil & Gas (NX:NZO) fell 2% to $1.49.

“The resource market is being sold off and being hit pretty hard since China has been expected to curb their lending and slow growth somewhat,” said Grant Williamson, director at Hamilton Hindin Greene in Christchurch. A stronger US dollar is mitigating the impact, he said.

New Zealand Refining (NX:NZR) fell 1.6% to $3.62.

Infratil (NZX: IFT ) said in its regular monthly report today that documentation to acquire Shell's New Zealand assets, which include a stake in the refinery, “is progressing satisfactorily” and is likely to be completed shortly. Infratil fell 1.2% to $1.63.

Charlie’s Group (NZX: CHA ), rose 2.1% to 9.9 cents, adding to a 7.8% gain on Friday when it announced it had turned to a first-half profit, from a year-earlier loss, on the sale of an Auckland property, cost cutting and growth in its Australian business.

Hallenstein Glasson (NZX: HLG ) rose 2.8% to $3.70, leading the NZX 50 higher for a second straight session following Friday’s 11% surge. First-half profit would jump 50% on buoyant trading over the Christmas-New Year period, the company announced on Friday, while raising its dividend.

Telecom (NZX: TEL ) fell 0.4% to $2.37, the lowest since mid-December. Analyst Rosalie Nelson told the NZ Herald that the impact on customer churn from the outage on its XT network last week is unclear because many XT business customers are tied to two or five-year deals. The company is expected to offer some form of compensation to customers.

Hamilton Hindin Greene’s Williamson said while there have been some positive earnings statements out of companies such as Hallenstein and Nuplex Industries, “the market continues to believe most companies will be saying there’s tough conditions going forward” when they post earnings.

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