Market close: NZ shares pace regional selloff, Telecom drops

BUSINESSDESK: New Zealand shares fell, pacing a regional selloff in equities as investors fret Greece will leave the euro zone, sapping risk appetite, while the World Bank downgraded its growth forecast for Asia-Pacific.

Telecom, the biggest company on the bourse, shed 2.5%.

The NZX 50 Index fell 19.66 points, or 0.6%, to 3510.19. Within the index, 26 stocks fell, 13 rose and 11 were unchanged.

Turnover was $111.6 million.

Japan's Nikkei 225 Index dropped 2% in early afternoon trading and Australia's S&P/ASX 200 Index declined 1.2% ahead of a meeting of European leaders that will discuss Greece's future in the euro.

The World Bank cut its growth forecast for Asia and the Pacific in 2012 to 7.6% from 7.8%, blaming growth in manufacturing exports and the spate of natural disasters last year.

"Investors are cautious," said Grant Williamson, a director at brokerage Hamilton Hindin Greene. "The market is down in reaction to Australia and some of the other Asian markets."

Telecom fell 6.5 cents to $2.575, trimming its gains this year to 23%. The stock has been driven up by the appeal of its dividend yield, currently 11.3%. 

Chorus, the network company spun off from Telecom in November, dipped 1.6% to $3.15.

It will spend as much as $965 million over the next two years in the roll out of its ultra-fast and rural broadband networks, the company said today.

Sky Network Television, the pay-TV company controlled by Rupert Murdoch's News Corp, fell 1.6% to $5.05, the lowest since March 1.

The stock has tumbled since the Commerce Commission announced on May 16 that it had launched a probe into Sky's content contracts with internet service providers.

"Investors hate regulation - it's not a nice word," Mr Williamson said. "Investors are reducing their exposure to the company."

Comvita jumped 8.6% to $3.15 after the honey-based products company reported annual net profit surged to a record.

Traders took the results as a sign its growth strategy finally started to pay off, vindicating its defence against last year's hostile takeover offer from multinational Cerebos Greggs.

"It's good to see the company wasn't taken over and now it is starting to perform to expectations," Mr Williamson said.

Fisher & Paykel Appliances fell 1.8% to 54 cents ahead of its results tomorrow as investors ponder whether it can maintain its recovery.

Fisher & Paykel Healthcare, which reports on Friday, rose 1.2% to $2.45. The company gets more than 50% of sales in US dollars.

"Healthcare investors will be looking at the effect the strong New Zealand dollar has had on earnings and what the company is saying about the slightly lower currency we have now," Mr Williamson said.

NZX, the stock exchange operator, rose 2.8% to $1.27 after adjusting for going ex its share cancellation and stock split.

The company is cancelling one share in every 10, for a payment per share of $2.85, or 28.5 cents for each share held. Immediately after the cancellation, NZX will undertake a seven-for-three share split.

"Investors will be receiving a capital return next month and we may well see that money going back into those shares," Mr Williamson said.

Pumpkin Patch, the children's clothing chain, rose 4.7% to 90 cents and was the biggest gainer on the NZX 50.

DNZ Property Fund rose 3.8% to $1.50 after reporting a 27% gain in annual earnings and signalling a bigger return to shareholders in the coming year.

Fletcher Building fell 1.3% to $6.30. Contact Energy was unchanged at $4.86.