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MARKET CLOSE NZ: shares slip on Fonterra dividend cut

New Zealand shares fell after Fonterra unexpectedly cut its forecast dividends and earnings for 2014, while the high kiwi against the Australian dollar weighed on companies such as Ebos Group with businesses across the Tasman.

The NZX 50 Index fell 2.202 points, or 0.05 percent, to 4704.304. Within the index, 22 stocks fell, 23 rose and five were unchanged. Turnover was $139 million.

Fonterra Shareholders' Fund units fell 5.7 percent to $5.75, having dropped to a record low $5.48 in intraday trading. The world's biggest dairy exporter cut its dividend and earnings forecasts for 2014, saying high milk powder prices haven't been matched by cheese and casein.

"It is very disappointing," said Grant Williamson, a director at Hamilton Hindin Greene. "The unusual situation in the dairy market caused this." The units' recovery at the close from an all-time low suggested some investors taking a medium-term view and an expectation it will get back to paying reasonable dividends, he said.

Ebos, which made its biggest ever purchase this year with the $1.1 billion acquisition of Australian pharmaceuticals firm Symbion, fell 2.8 percent to $8.70 as the kiwi dollar traded at 90.62 Australian cents, near a five-year high.

Chorus climbed 1.1 percent from a record low to $1.33.

"We're starting to see some bargain hunting coming in," Williamson said. "A lot of the damage has already been done."

Among other companies with reviving stocks after recent selloffs, Xero rose 1.6 percent to $33.51.

The cloud-based accounting service company "went through a period of profit taking" and now "there's a bit more renewed buying interest at these lower levels."

MightyRiverPower fell 0.7 percent to $2.01 and Contact Energy fell 0.8 percent to $4.93. Vector dropped 1.9 percent to $2.55 and TrustPower was unchanged at $6.50.

Meridian Energy rose 1.6 percent to 96 cents, edging back toward its issue price after the announcement that it will join the NZX 50 from Dec. 23, replacing AMP, which fell 2.5 percent to $4.66.

Kathmandu, the outdoor clothing chain, dropped 6.1 percent to $3.10 and clothing retailer Hallenstein Glasson Holdings dropped 1.3 percent to $3.90.

Fletcher Building slipped 0.3 percent to $8.79 and Telecom fell 0.2 percent to $2.285.

SkyCity Entertainment Group fell 4.2 percent to $3.66.

(BusinessDesk)

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