Fletcher Building propels NZ sharemarket higher

The New Zealand sharemarket rose today as Fletcher Building shares pushed to a three month high and after the US market had its best week in about two months.

The benchmark NZX-50 index closed up 19.594 points, or 0.6%, at 3387.412. Turnover was worth $125.26 million. There were 54 rises and 30 falls among the 121 stocks traded.

Fletcher Building rose 19c, or 2.4%, to 823 and traded as high as 824, a level not seen since early November. Brokers attributed the rise to the company's likely inclusion in the S&P/ASX 200 index after taking over Crane Group.

While Telecom fell 3c to 221, it expects its weighting S&P/ASX 200 index will decrease to around 25-30% of its current level. Brokers said the weighting is currently around 0.26% and the changes are in a month's time.

Volume was high in Telecom with 16.5 million shares traded, while 3.74 million Fletcher Building shares traded.

The index change resulting from a change in methodology was applying downside pressure to Telecom's share price, said James Lee, head of institutional equities at First NZ Capital. Fund managers were adjusting to the changes.

"Index inclusion can be material for stocks," he said.

The benefits of a joint bid by Telecom and Vodafone for the government's rural broadband Initiative were seen as being some way off.

PGG Wrightson shares fell 3c to 59 as investors continue to assess the chances of a second bid for the company, which is subject to a bid for control from interests associated with China's Agria.

The company has opened its books to the unnamed potential second bidder. Federated Farmers said last week it was considering media reports that Canada's Agrium may be a new suitor as it already owns 50% of rural services firm RD1.

Mr Lee said an existing industry player would have higher synergy benefits than Agria and there was still time for a competing offer to emerge.

Freightways gained 8c to 328, NZ Refining rose 8c to 493 and Steel & Tube rose 5c to 235. SkyTV rose 2c to 540 and Ebos Group rose 8c to 758.

Tourism Holdings rose 4c to 63, having lost 15c on Friday after the company signalled a breach of banking covenants in the March quarter and cut its full-year forecast to a $4 million loss from a $2.5 million net profit previously forecast.

Contact Energy rose 7c to 625 and Auckland Airport rose 2c to 226.

NZ Wool Services International gained 3c to 50, while Cavalier Carpets fell 8c to 312.

Mercer Group traded at 5.5c after saying underwriters will pick up 59% of its $9 million rights issue.