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MARKET CLOSE: NZ shares extend decline on US rate outlook

MARKET CLOSE: NZ shares extend decline on US rate outlook; Spark, Fletcher fall

By Suze Metherell

Sept. 10 (BusinessDesk) - New Zealand stocks extended their decline from a record in quiet pre-election trading as speculation US interest rates will rise sapped investor appetite for risk-sensitive equity markets. Companies shedding rights to upcoming dividends led the decline, while Spark New Zealand and Fletcher Building fell after the local bourse joined a region-wide selloff.

The NZX 50 Index fell 7.042 points, or 0.1 percent, to 5236.657. Within the index, 22 stocks fell, 15 rose and 13 were unchanged. Turnover was a lighter than usual $82 million.

Electoral uncertainty ahead of the Sept. 20 general election has kept investors away from the local bourse in recent days. Meanwhile markets across Asia fell, with Hong Kong's Hang Seng Index dropping 1.8 percent and Australia's S&P/ASX 200 Index declined 0.7 percent on speculation the US Federal Reserve will raise interest rates from zero sooner-than-expected.

"People are sitting on their hands and waiting for the election to finally sort itself out," said James Smalley, director at Hamilton Hindin Greene. "There is a bit of weakness in the US which was on the back of talk that 10-year Treasuries rose to three-year highs, so the expectation is the Fed is going to be raising rates next year, so perhaps there's a little bit of concern and they're trying to price that in now,"

Local companies with substantial overseas investment fell on the global jitters, Smalley said.

Spark, formerly Telecom Corp, fell for a third day, down 1.6 percent to $3.03. Fletcher, New Zealand's largest listed company, declined 1.2 percent to $9.15.

Air New Zealand fell 2.4 percent, or 5 cents to $2.06, as the national carrier shed rights to its final and special dividends totalling 15.5 cents per share, payable on Sept. 22. The airline flagged the special dividend in August after boosting annual profit 45 percent to $262 million.

Steel & Tube Holdings led the benchmark index lower, down 3.3 percent, or 10 cents, to $2.93 as it shed rights to its 9 cents final dividend. New Zealand Oil & Gas fell 2.6 percent, or 2 cents, to 76 cents, as it gave up rights to its 3 cents final dividend. Trade Me Group dropped 3 percent, or 11 cents, to $3.57. Its 8 cents final dividend is payable on Sept. 23.

Sky Network Television rose 1.5 percent to $1.35, recovering from a 2.2 percent drop at the start of the week, as $20 million worth of its shares traded hands today. Earlier this week New Zealand's dominant pay-TV company said it failed to renew the broadcast rights to US PGA Golf, European PGA Golf and the PGA Asian Tour Golf. Pay-TV providers are coming under increasing pressure as their audience base turns to free, albeit not always legal, options online, and investors are still trying to weigh up the online threat, Smalley said.

Meridian Energy was the best performer on the benchmark index, climbing 2.3 percent to $1.35.

Outside the benchmark index, New Zealand Refining Co slipped 0.6 percent to $1.59. A substantial shareholders notice showed the 8.1 percent stake held by the estate of late Canadian philanthropist George Ryerson Gardiner has been divided evenly eight ways as an inheritance.


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