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Shares mixed as heavyweight stocks fall, retailers gain

BUSINESSDESK: New Zealand shares were mixed in trading today as declining heavyweight stocks, including Fletcher Building and Contact Energy, were offset by gains in retail stocks offering investors better returns than term deposits.

The NZX 50 index fell 15.92 points, or 0.4%, to 3907.99. Within the index, 24 stocks gained, 13 fell and 13 were unchanged. Turnover was $115.3 million.

Contact Energy was the biggest decliner, reversing the previous day's gains and falling 3.7% to $5.27 from a 10-month high, while Fletcher slipped 2.4% to $7.30, down from a 12-month high. Telecom fell 0.6% to $2.36.

"They've had a pretty reasonable run, and you have to wonder whether it's just a bit of a pullback following recent strong performance," says Craig Brown, senior investment analyst at OnePath NZ. "We didn't get a strong lead from offshore markets overnight and Asia's mixed, so the market's probably lacking direction."

Retailers gained, with the NZX Consumer index up 0.7% to a four-and-a-half-year high 1792.14, led by fast-food operator Restaurant Brands, which climbed 2.2% to $2.38.

The Warehouse rose 1% to $3.12, children's clothing chain Pumpkin Patch advanced 0.8% to $1.20, Hallenstein Glasson increased 0.8%to $4.99 and outdoor equipment chain Kathmandu gained 0.6% to $1.83.

Mr Brown says some retail stocks offer reasonable income streams to shareholders and that may have lifted appetite for the better-performing companies. The Warehouse has a gross dividend yield of 9.25%, Restaurant Brands has 9.81% and Hallenstein Glasson 9.09%, according to NZX data.

"It's been a tough time for retailers which had been sold off, some quite aggressively," Mr Brown says.

Government figures today showed a slowdown in spending on electronic cards last month, particularly in consumable goods such as food and liquor.

Separately, the New Zealand Institute of Economic Research's quarterly survey of business opinion showed more improvements in the sector, especially in Auckland.

Shares in industrial rubber goods maker Skellerup fell 1.1% to $1.75 a day before the stock sheds its dividend right. The stock rose to a record-high $1.77 yesterday, and is rated an average "outperform" based on three analyst recommendations compiled by Reuters with a median target price of $1.69.

Xero, the cloud-based accounting software firm, rose 0.6% to $5.38 after the Wellington-based published its prospectus for a secondary listing on the ASX. Governance software maker Diligent Board Member Services climbed 1.8% to $3.92.