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Market Close: Sharemarket starts week on a positive note

Monday 14th February 2011

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The New Zealand sharemarket started the week on the front foot as positive international developments outweighed weak domestic economic data.

Strong commodity prices, the resignation of Egyptian President Hosni Mubarak and strength in the United States market drove many markets higher today. The benchmark NZX-50 index closed up 16.028 points, or 0.476%, at 3383.47.

Turnover was worth $74.2 million, There were 51 rises and 28 falls among the 118 stocks traded.

"The market is just following Australia and the overnight rally in markets," James Lee, head of institutional equities at First NZ Capital, said.

The strength came even though reports of weak sales by retailers at Christmas were backed up by official data today showing a decline in retail sales in December.

Lee said the weakness in retail sales data was expected, while BNZ's economists said the data did not deny the likelihood that an improvement was occurring in 2011.

Freightways (NZX: FRE ) rose 7c to $3.27 after its half-year result released today included a strong second quarter. The company lifted net profit for the six months to the end of December by 9% from a year earlier.

Guinness Peat Group (NZX: GPG ) fell a cent to 76 and good volume continues to trade in the stock after it signalled a capital return and break up plan on Friday."

Lee said the company's distribution process was under way and the shareholder base was changing.

"Shareholders who are there for the longer term upside are getting out and the guys with the arbitrage positions are getting in. GPG is no longer a long term story," he said.

Telecom rose 5c to $2.21 even though Communications Minister Steven Joyce was quoted on warning against assuming Telecom would secure the bulk of the contract to roll out ultrafast broadband to urban centres, while describing himself as an outsider to the process."

Mainfreight fell 5c to $8.10, Xero gained 5c to $2.65, while Fisher & Paykel Healthcare was down 5c to $3.03.

Fletcher Building rose 9c to $8.25, Auckland Airport rose 1c to $2.23 and ANZ rose $1.09 to $33.91.

Infratil rose 2c to $1.94 on a day Infratil Energy Australia disclosed the purchase of a generation site in New South Wales.

Kathmandu rose 5c to $2.16, Michael Hill fell 1c to 89c and The Warehouse rose 2c to $3.55.

Vector fell a cent to $2.49 and TrustPower was unchanged at $7.20.

Contact Energy rose a cent to $6.24. In the US, stocks closed out their second straight week of gains on Friday (local time) with a rally sparked after Egyptian President Hosni Mubarak resigned, easing tension around the region for now.

Financials led on the back of the reduced uncertainty, rising throughout the trading day. The Dow Jones industrial gained 0.4% at 12,273.26, the Standard & Poor's 500 Index was up 0.6% at 1329.15, and the Nasdaq Composite Index was up 0.7% at 2809.44. For the week, the Dow was up 1.5% and both the S&P and Nasdaq were up 1.4%.

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