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Market close: Retailers Kathmandu, Warehouse lead local rally

BUSINESSDESK: New Zealand shares rose as part of a region-wide rally, led by retailers Kathmandu, Warehouse Group and Restaurant Brands. Diligent Board Member Services paced falling stocks after reporting third-quarter sales.

The NZX 50 Index rose 24.33 points, or 0.6%, to 3940.69. Within the index, 27 stocks rose, 14 fell and 9 were unchanged. Turnover was about $127 million.

Kathmandu, the outdoor clothing and equipment retailer, climbed 3.3% to $1.89. Warehouse, the biggest retailer on the NZX, rose 3.2% to $3.20.

"Some of the other retailers have done well over recent weeks," says Mark Lister, head of private wealth research at Craigs Investment Partners. "Kathmandu is playing catch-up and the Warehouse is rising on the back of its dividend and people are looking for stocks that haven't run hard yet."

AMP, the wealth management and insurance company, rose 2.3% to $5.73.

"Part of it is that the New Zealand dollar has weakened against the Aussie," Mr Lister says. "Since they are a sort of fund manager when share markets do well they do well. The New Zealand sharemarket has been having a good run this year."

The NZX 50 has gained 19% this year. The New Zealand dollar fell to 79.46 Australian cents at 5pm from 79.66 cents at 8am as a more benign than expected inflation report and a weaker Australian economic outlook trimmed the appeal of the currency.

Telecom, New Zealand's largest listed company, rose 0.8% to $2.40. Chorus, the telecommunications network which demerged from Telecom last year, increased 2% to $3.43.

Fletcher Building, New Zealand's largest listed construction company, gained 2.2% to $7.52.

SkyCity Entertainment Group, the casino operator in talks with the New Zealand government to build a convention centre in Auckland, rose 1.6% to $3.82 ahead of its annual general meeting on Thursday.

Sky Network Television, the pay-TV company controlled by Rupert Murdoch, climbed 0.2% to $5.06 before its general meeting in Auckland this week. Vector, the gas, electricity and telecommunications network, shed 1.4% to $2.82 ahead if is annual meeting.

Diligent, the software-as-a-service company for corporate governance, fell 1% to $3.77 even as its rapid sales drive in the third quarter saw revenue surge 145% to $US11.8 million.

Shares in the New York-based company have more than doubled this year. The stock has surged as high as $4.09 from just 7 cents a share in the depth of the global financial crisis in 2009.

"There was nothing wrong with the numbers they reported," Mr Lister says. "They are comparing each reporting period with a year back. In the third quarter last year new sales almost double so it's getting harder and harder to past a strong numbers.

"The stock will still continue to perform – it's a youthful industry. Over time the share price will trend up but be won't see it doubling again over the next 12 months." 

The decline was led by PGG Wrightson, New Zealand's largest agricultural services company, down 2.8% to 35 cents. Nuplex, the specialty chemicals maker, declined 1.9% to $3.06.