Market close: shares edge up as investors digest Telecom reforms, but Contact falls

New Zealand shares rose, led by Telecom as investors digested its plan to slash costs, but Contract Energy extended its slide on concern the possible closure of the Bluff smelter could leave power companies with even more surplus capacity.

The NZX 50 Index rose 1.43 points, or 0.03 percent, to 4412.84. Within the index, 25 stocks rose, 20 fell and five were unchanged. Turnover was $159 million.

Telecom gained 3.6 percent to $2.45. Last month the company announced plans to strip out as much as $110 million in annual costs by cutting up to 1230 jobs, in addition to staff cuts at its Gen-I unit in Australia. The phone company has a dividend yield of 14.2 percent.

"People are considering the restructuring changes that are being announced - there's definitely been more broking reports on Telecom," says Shane Solly, portfolio manager at Mint Asset Management. "A pretty healthy dividend yield is also helping it along."

Among other stocks often held for their dividend, lines company Vector gained 1.8 percent to $2.89 and Kiwi Income Property rose 1.3 percent to $1.15.

Contact, the biggest power company on the NZX 50, declined 2.2 percent to $5.39 as the war of words continued between the government, Meridian and smelter owner Rio Tinto over the cost of power to the facility.

"There's oversupply in the wholesale [power] market as it stands," Mr Solly says. "Contact is already being impacted."

Summerset, the retirement village operator, gained 1.9 percent to $2.70 and rival operator Ryman Healthcare rose 0.2 percent to $5.09. Metlifecare was up 0.9 percent to $3.24.

OceanaGold, the operator of the Macraes gold field, fell 9.8 percent to $3.05 as better economic data out of the US sapped the appeal of gold as insurance against a downturn. Spot gold fell as low as $US1563.06 an ounce, a four-week low.

NZX, the stock market operator, rose 1.5 percent to $1.36 and Heartland Bank climbed 1.3 percent to 76 cents.

Port of Tauranga was up 1.1 percent to $13.85.

Fletcher Building, the biggest company on the NZX 50, halted its slide, gaining 0.1 percent to $8.45.

Fisher & Paykel Healthcare, which gets more than 50 percent of its revenue in US dollars, fell 1.9 percent to $2.56 as the kiwi climbed above 84 US cents.

Jeweller Michael Hill International fell 2.2 percent to $1.35.

(BusinessDesk)