Market close: NZX 50 rises to take 6.9% quarterly gain as Telecom cuts costs

New Zealand shares rose, rounding out a 6.9 percent quarterly gain for the NZX 50 Index, as Telecom outlined plans to cut as much as $110 million in annual costs and Meridian Energy shrugged off worries Rio Tinto may shutter its smelter, denting power demand.

The NZX 50 Index rose 10.69 points, or 0.2 percent, to 4422.75 on the final day of the first quarter, a record high. Within the index, 27 stocks rose, 18 fell and five were unchanged. Turnover was $136.9 million.

Telecom rose 0.9 percent to $2.34 and was the most heavily traded stock by value after saying it will slash as much as $110 million in annual costs by cutting up to 1230 jobs. The retrenchments will generate one-time costs of $70 million to $80 million this year.

Job cuts had already been flagged in the market though they have arrived "a lot quicker than most people thought", says James Lee, head of institutional equities at First NZ Capital. "Lower costs equal higher profits" though the new was already partly in the share price.

"The market continues to perform," he says. "Yield is still a theme globally."

Chorus, the network company split off from Telecom in 2011, fell 1.4 percent to $2.81.

Contact Energy ended the day up 0.5 percent to $5.70 after the government said it was in direct talks with Rio Tinto over the price of power supplied to the Bluff smelter by Meridian Energy, calming concerns the resources giant could pull the plug on a plant that consumes a seventh of the nation's electricity.

"The response in the market shows there's not a lot of fear in the market. The issues are well understood," Mr Lee says.

Bathurst Resources rose 2.5 percent to 41 cents after the would-be coking coal miner said it has gained tentative approval from the Environment Court to go ahead with its Escarpment Mine project on the West Coast's Denniston Plateau.

Fonterra Shareholders' Fund notes rose 0.5 percent to $7.49 a day after the dairy company lifted its forecast milk payout because of strong global dairy prices.

Auckland International Airport rose 0.9 percent to $2.945 and Fisher & Paykel Healthcare fell 1.9 percent to $2.62.

Fletcher Building, the biggest company on the NZX 50, slipped 0.1 percent to $8.57. Ryman Healthcare gained 0.6 percent to $5.04 and Summerset Group rose 1.6 percent to $2.62.

Steel & Tube Holdings rose 2.7 percent to $2.68, leading the index higher on the day. Trade Me, the auction website, gained 2.2 percent to $4.73.

(BusinessDesk)