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MARKET CLOSE: NZ stocks fall; GPG slides on Gibbs departure, FPA drops

Tuesday 29th June 2010

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New Zealand stocks fell for their fourth successive day, taking the NZX 50 Index below 3,000 points for their first time since June 8, with Guinness Peat Group falling on the news that director Tony Gibbs was sacked and Fisher & Paykel Appliances dropping.

The NZX 50 fell 17.3 points, or 0.6%, to 2,991.01. Within the index, 27 stocks fell, 10 rose and 13 were unchanged. Turnover was $77.3 million.

Shares in GPG (NZX: GPG ), the investment holding company, fell 2.9% to 66 cents, on news that executive director Tony Gibbs was fired by the investment company for publicly criticising its demerger plans. The stock price rallied last week after Gibb’s statement, having declined previously as investors voiced their displeasure with the plan to spin of GPG’s Australian assets into a separate entity listed on the ASX.

“Initially a bit of shock that Gibbs dumped, saw the stock fall to 63 cents this morning,” said Grant Williamson, a director at Hamilton Hindin Greene. “It has since recovered a bit on the GPG board statement that they will look at alternatives and talk to shareholders about their concerns, so there are still some positives that could come out of Gibb’s firing.”

Williamson said equity markets worldwide are reflecting “a fair degree of uncertainty.” With no clear trend in the US, it is difficult for the local market to find a lead.

Telecom (NZX: TEL ) fell 0.5% to $1.89, after it was announced that Crown Fibre Holdings, the state-owned company responsible for selecting partners to manage the government's $1.5 billion Ultra Fast Broadband initiative, is asking all bidders to refine their proposals around potential regulatory settings.

Communications and Information Technology Minister Steven Joyce said the request was unlikely to affect the rollout of the initiative, which could be expected as early as September. Telecom is one of the 32 estimated bidders in the process.

Vector (NZX: VCT ), a power and gas distributor vying for a share of the broadband work, was unchanged at $2.17.

Steel & Tube Holdings (NZX: STH ) rose 2.2% to $2.35, pacing gainers. Nuplex (NZX: NPX ), the chemicals and resins manufacturer, rose 2.1% to $2.92, and finance company PGG Wrightson (NZX: PGW ) rose 2% to 51 cents.

OceanaGold (NZX: OGC ) fell 3.3% to $4.45. The gold mining company had earlier announced that it is looking at moving from opencast to underground mining at Reefton, on the West Coast, and at expanding its current opencast pit. The move will force the company to increase its exploration budget to from US$2.8 million for 2010 to US$7.2m for 2010/2011, according to a company statement.

New Image (NZX: NEW ) fell 6.3% to 30 cents. The company was yesterday asked to explain by the NZX why its stock had tumbled 16% since the start of trading on June 23 and it couldn’t give a reason. Still, the company said its shares are undervalued and that it may re-introduce its share buy-back programme.

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