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MARKET CLOSE: Shares fall with global slide; Rakon, Nuplex fall

Friday 3rd July 2009

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New Zealand shares fell for a third day, as rising jobless rates in Europe and the U.S. eroded optimism for a quick recovery in the global economy, pushing down stocks from Tokyo to New York. Prospects for dwindling earnings when companies report for the year to June are also weighing on the New Zealand market.

Rakon Ltd (NZX: RAK ), which sells its navigation system components in the U.S., Europe and Asia, fell 4.1% to $1.40. Nuplex Industries (NZX: NPX ), the specialty chemicals makers, fell 3.9% to $1.47.

The earnings season “is going to be pretty ugly. Economic conditions would suggest that,” said Craig Brown, who helps manage about NZ$7 billion at ING New Zealand Ltd.

Based on ING’s assessment, companies on the NZX 50 on average will report a 4.2 drop in earnings per shares for the 12 months through June 30, he said.

Steel & Tube Holdings (NZX: STU ), which supplies steel building products such as reinforcing rods, fell 2.4% to $2.80. Sky Network Television (NZX: SKT ), the nation’s biggest pay-TV company, fell 2.6% to $4.05.

Pike River Coal (NZX: PRC ), the only dedicated coal miner on the NZX 50, fell 2.6% to $1.14. OceanaGold Corp., which operates the Macraes gold field, fell 2.9% to $1.35. New Zealand Oil & Gas (NZX: NZO ) fell 1.3% to $1.54.

Infratil Ltd (NZX: IFT ) slipped 0.6% to $1.70. Energy Developments, the Brisbane-based renewable energy company that’s 32% owned by Infratil, invited Archer Capital to begin due diligence after the private equity firm revised its takeover offer. Energy Developments jumped 14% to A$2.27, valuing Infratil’s stake at about A$99 million.

Pumpkin Patch (NZX: PPL ) rose 0.7% to $1.46 after the company was raised to ‘accumulate’ by Morningstar’s AspectHuntley unit after the children’s clothing chain said it would close most of its US stores, curbing losses and expenditure in a market and bolstering its earnings outlook. 

“A significant reduction in US losses coupled with lower capital expenditure in 2010 and working capital savings should improve group cash flows and lift returns going forward,” analysts at the research firm said. 

The NZX 50 Index fell 6.68%, or 0.2%, to 2761.51. Within the index, 25 stocks fell, 11 rose and 15 were unchanged. Turnover was $76.3 million.

Across Asia today, Japan's Nikkei 225 index shed 1% to 9807.48 in early afternoon trading and Hong Kong's Hang Seng declined 0.5% to 18094.66.

In Sydney, the S&P/ASX 200 Index slid 1.4% to 3825.10, paced by a slide in metals and resource companies as commodities fell. Rio Tinto dropped about 5% to A$49.18 after completing its US$15.2 billion share sale to repay debt.

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