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MARKET CLOSE: NZ stocks rise; AMP leads gainers

MARKET CLOSE: NZ stocks rise; AMP leads gainers on AXA bid

(BusinessDesk) – New Zealand stocks rose, led by AMP Ltd., after it teamed with AXA SA to make a new takeover offer for Australia’s AXA Asia Pacific Ltd.

The NZX 50 Index rose 17.64 points, or 0.5%, to 3,328.22. Within the index, 23 stocks rose, 14 fell and 13 were unchanged. Turnover was $63.4 million.

U.S. stocks fell on Friday, sending the Standard & Poor's 500 Index down 1.2%, after Cisco Systems' forecast missed estimates and has concern swirled about Europe's sovereign debt crisis. Sentiment was further dented by sliding commodity prices.

“It is quite surprising to see New Zealand firmer after the weakness on Friday from offshore,” said Grant Williamson. “We don’t seem to be paying too much attention to movements in the U.S. market, with demand for our currency and quality high yield stocks underpinning the market.”

AMP, the Australian wealth manager, rose 5.2% to $7.15 on the NZX and rose 4% to A$5.54 on the S&P/ASX 200 Index after announcing a takeover proposal that values AXA Asia Pacific at A$13.3 billion. That’s the same valuation as for National Australia Bank’s offer, which was knocked back by regulators.

Under the proposed scheme of arrangement, minority shareholders of AXA AP would get at least A$6.43 a share in stock and cash, according to a statement from AXA AP. The offer is for 0.73 AMP stock and a variable amount of cash, based on the weighted average trading price of AMP’s shares.

Pyne Gould Corp., the financial services company, rose 2.4% to 42 cents after announcing plans to distribute most of its stake in the proposed South Island bank if the merger proceeds.

The remaining holding will be separately placed to investors about the same time as the distribution to raise cash for Pyne Gould. Today's statement says the stake will be 72% of the new bank, although previous documentation has put the holding at 71%. The exact amount to be distributed and how much will be placed hasn't been decided yet.

Telecom Corp., New Zealand’s biggest telephone company, rose 1.8% to $2.22, a
seven-month high. Williamson said the price looked to be driven by foreign buying as well as the company’s possible participation in government’s ultrafast broadband project.

Guinness Peat Group, the investment company, rose 1.4% to 74 cents after saying its Coats business had benefited from stronger demand in the second half of the year.

The industrial thread maker, which is GPG’s largest investment, has found its crafts market “has remained challenging,” maintaining sales at 2009 levels, GPG says. Raw material prices peaked in the September quarter, “putting pressure on gross margins.”

Australia and New Zealand Banking Group, the country’s biggest lender, rose 0.3% to $29.65 on the NZX. The Australia-based owner of the ANZ and National Bank brands in New Zealand plans to invest a further A$126 million in China’s Bank of Tianjin.

ANZ already owns 20% of the Chinese bank and the additional investment represents it share of its planned 4.2 billion yuan capital raising to support growth.

Pike River Coal Ltd. rose 1.1% to 96 cents after chief executive Peter Whittall told shareholders at the company’s annual meeting that he is confident in the business’s fundamentals despite a number of setbacks.

The coal miner was forced to cut its production forecast by almost half to 340,000-to-360,000 tonnes due to delays at its hydro mining operations.

Steel & Tube Holdings, the maker of steel products used in the construction industry, fell 3.8% to $2.30, pacing decliners on the main board.

Cavalier Corp, the country’s only listed carpet maker, fell 3.1% to $3.10, and
Vital Healthcare Property Trust, the investor in specialist medical clinics, fell 2.3% to $1.25.

Pumpkin Patch Ltd., the children’s clothing retailer, fell 2.1% to $1.85, and Kathmandu Holdings, the outdoor clothing retailer, fell 0.6% to $1.66.

Williamson said the sector was unlikely to show any earning improvements soon with retailers using discounts to lure customers into buying.

New Zealand’s service sector maintained its expansion last month though the pace of growth slowed, according to the BNZ-Business NZ Performance of Services Index.

The index stood at 52.0 last month, down 2.9 points from September. Retail sales make up about two-third of the services sector survey.

Government figures also showed retail sales unexpectedly rose in the third quarter, suggesting consumers increased spending ahead of the hike in GST last month.

Sales rose 0.7% from the second quarter, when they gained a revised 1.5%, the government statistician said.


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