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MARKET CLOSE: Michael Hill leads market to a peak

Thursday 7th October 2010

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New Zealand stocks rose for the third time in four sessions, reaching their highest level since September 28, after an unexpected jump in Australian job numbers helped sooth investor fears around the pace of the economic recovery.

Michael Hil lled rises after reporting strong sales growth in the first quarter.

The NZX 50 Index rose 1.03 points, or 0.03%, to 3,236.1. Within the index, 20 stocks rose, 17 fell and 13 were unchanged. Turnover was $97.7 million.

Australia’s economy added 55,800 new full-time jobs in September, significantly above the 20,000 positions economists anticipated by economists, and saw the Australian dollar jump more than half a cent against the greenback to 98.37 US cents.

“Australia’s employment numbers have come in better than anticipated, and the expectation is that the RBA will have to push rates up,” Milford Asset Management's Alan Moore said. “Obviously we’re going to see the Australian dollar go to parity before Christmas.”

Michael Hill (NZX: MHI ) rose 4.4% to 71 cents after the company said sales for the three months to the end of September were 12.8% to $95.4 million compared to the same period in the previous year.

Chairman Michael Hill said the company was "very satisfied" with the gains made in all markets, even though the effects of the global financial crisis were still being felt in the corresponding quarter in 2009.

Hallenstein Glasson (NZX: HLG ) rose 3.3% to $4.39, Argosy Property Trust, the property investor formerly known as ING Property, rose 1.3% to 77 cents and AMP NZ Office Trust (NZX: APT ) rose 1.3% to 79 cents.

Kiwi Income Property Trust (NZX: KIP ) rose 1% to $1.05 after the diversified office and retail property investor told unit-holders it shopping centres face an improved trading environment provided the economy continues to recover as expected.

Comvita (NZX: CVT ) was unchanged at $1.90 after it announced the sale of a 3.5% stake in the company for $2 million to its Asian partners as part of a strategic alliance in the region. GPE, the master agent in China, and Aju Pharm, a distribution partner in South Korea, bought 500,000 shares each at $2 per share by way of a private placement - a 5% premium on today’s share price.

Pyne Gould (NZX: PGC ) fell 2.3% to 42 cents, pacing decliners on the NZX 50. The Warehouse (NZX: WHS ) fell 1.8% to $3.88, Cavalier (NZX: CAV ) fell 1.4% to $2.91, and Sanford (NZX: SAN ) fell 1.2% to $4.

Tower (NZX: TWR ) fell 0.6% to $1.82 after its hostile bid for Fidelity Life looked set to fail with Fidelity’s biggest shareholders, who control 70% of the company, saying they planned to reject the unsolicited $118 million cash and scrip takeover offer. Farmers Mutual Group, which holds a 10.8% stake in Fidelity, also added its opposition to the proposed takeover, saying it significantly undervalued the company.

DNZ Property Fund (NZX: DNZ ) fell 0.9% to $1.13. Bernard Whimp, the investor who netted 2.2 million shares in the fund by offering just 60 cents a share for some of their stock which was valued at 90 cents, has begun to sell his holding, according to press reports. At today’s price he potentially could realise a profit of over $1 million.

Affco (NZX: AFF ) was unchanged at 36 cents, after the Talley’s family reached an unassailable holding in the company, at 90.5%. The diversified food group gave notice yesterday of dominant ownership in a statement to the NZX, signed by director Andrew Talley.

Widespread Energy  was unchanged at 15 cents on the NZAX after the company said it plans to begin an undersea exploration programme on its Chatham Rise project in 2011, and will deliver its year-one progress report to Crown Minerals by the end of this year. The company hopes to prove estimated deposits of 100 million tonnes of rock phosphate in the area, which could be worth $28 billion. Shares have risen 17% in value so far this year.

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