Market close: Shares fall as investors watch rivalry for Telecom

BUSINESSDESK: New Zealand shares fell as the weight of Telecom, the biggest company on the exchange, held back the NZX 50 Index in the face of a region-wide rebound.

Telecom rivals Telstra and Vodafone today confirmed they are in talks to consolidate their local units.

The NZX 50 fell 31.20 points, or 0.9%, to 3420.79. Within the index, 28 stocks fell, 15 rose and seven were unchanged. Turnover was a lower-than-average $62 million.

Telecom fell 4.1% to $2.435 after Telstra, Australia’s biggest phone company, said it is in talks with Vodafone over the possible sale of its TelstraClear unit in New Zealand.

A tie-up would create a stronger competitor for Telecom and possibly give Vodafone an advantage in making content deals.

A deal would create "a faster competitor" for Telecom, "building a bigger company than now and with their own content and network", said Mark Warminger, a portfolio manager at Milford Asset Management.

The decline in Telecom stock would provide a buying opportunity at some point, given the company's returns and 11.8% dividend yield, he said.

Sky Network Television, the pay-TV operator controlled by News Corp, fell 0.6% to $4.90. The company's content deals with telecommunications companies are facing scrutiny from the Commerce Commission.

New Zealand shares fell as benchmark indexes across the Asia Pacific region rose, rebounding from a weekend of bad news including US jobs and manufacturing data.

Australia's S&P/ASX 200 Index was 1.3% higher in afternoon trading as the Reserve Bank cut its cash rate a quarter point as expected.

Fisher & Paykel Appliances fell the most on the NZX 50, down 5.6% to 51 cents as the kiwi edged up from its recent lows.

Xero, the online accounting company, slipped 0.5% to $4.08 after Australian rival MYOB launched a promotion with Westpac offering free website services.

Rubicon, the biotech company focused on forestry, fell 10% to 35 cents after announcing a fully-underwritten one-for-three rights issue to raise $21 million. The company will also extend its $US20 million bank debt facility through to July 1, 2014.

Kirkcaldie & Stains, the Wellington department store and property group, was unchanged at $2.80 after the investment vehicle of father and son businessmen Sir Selwyn and David Cushing disclosed its stake has risen to 19.55%, near the 20% level that would trigger a full takeover.

Metlifecare was unchanged at $2.08 after saying an appraisal report by Northington Partners deemed its proposal to merge with Vision Senior Living and Private Life Care Holdings is fair to the rest home operator’s minority shareholders.

Nuplex Industries, the specialty chemicals maker, rose 0.9% to $2.23 after saying full-year earnings would be at the bottom end of its range although second-half trading has met expectations and margins have improved.

“During the period, in addition to challenging market conditions, exchange rates and raw material prices have fluctuated significantly,” said chief executive Emery Severin.

“However, with our focus on managing those elements we can control, we have seen an improvement in unit margins.”

OceanaGold, the operator of the Macraes gold field, climbed 11% to $2.59 as the spot price of gold held its recent gains, trading at $US1618.04 an ounce, from as low as $US1538.05 last month.