MARKET CLOSE NZ shares rise in absence of US budget impasse progress

New Zealand shares rallied along with other regional bourses, as equity investors appeared to shrug off the US federal budget impasse for want of new information.

The NZX 50 Index rose 24.998 points, or 0.5 percent, to 4,768.870. Within the index, 26 stocks rose, 15 fell, and nine were unchanged. Turnover was $98 million.

In a day short on corporate news, the two biggest events were Fonterra's acknowledgement that it is in talks with French food giant Danone over damages it claims were caused by the New Zealand dairy exporter's false alarm recall of infant formula.

"That's not surprising," said Mark Lister at Craigs Investment Partners. "If I were Danone, I would be trying to get some compensation because they (Fonterra) had affected my brand."

Danone produces the Karicare brand, which was particularly hard-hit in the scare, which affected New Zealand and Chinese markets particularly. However, the price of Fonterra Shareholders Fund units rose 0.4 percent to $7.06.

Outside the index, workforce provider AWF announced a $56 million purchase of the Madison recruitment group, adding a white collar labour element to its suite. Shares in AWF rose 2.4 percent to $3.

Fletcher Building gained almost 1 percent to $9.59 while Telecom was unchanged at $2.30. Skellerup Holdings fall 4.8 percent to $1.58 after shedding its 5 cents a share final dividend.

With the Meridian share float now open, the NZX published the first of two independent research reports on the state-owned power company, from Wellington's Woodward Partners, and will publish another from Edison International Research tomorrow.

Woodward Partners puts a fair value on Meridian of $1.98 a share and rates its three largest risks as low rainfall affecting Meridian's ability to generate sufficient hydro-electricity to meet demand, weak electricity demand driving wholesale prices lower, and the potential for the Labour-Greens central buyer policy to be implemented.

Lister said investors had been cautious about Meridian before seeing detail of the share offer because of the underperformance since listing of MightyRiverPower shares, which lifted 1.8 percent to $2.28 on the same day as the company made presentations to institutional investors. Contact Energy shares fell 0.9 percent to $5.34.

"People were probably going to have a negative view beforehand, but now they are moderating that negative view since the information releases and interest has ramped up," Lister said of the Meridian float, with retail investors responding positively to the $1.60 issue price cap and the installment receipts process.

The retail offer is open until Oct 18.

Elsewhere, Kathmandu continued its strong run, up a further 1.8 percent to $3.36, while the top gainers on the day were Heartland New Zealand and Chorus, up 3.6 percent and 2.2 percent respectively to 86 cents and $2.74.

Guinness Peat Group, which this week exited its Tower stake - the only remaining asset outside of the Coats business, rose 0.9 per cent to 57 cents with 5 million shares changing hands. Tower fell 1.1 percent to $1.78.

(BusinessDesk)