Market close: shares fall as smelter stoush weighs on Contact

New Zealand shares fell as investors fretted about the standoff between Rio Tinto and the government over the price of electricity to the Bluff smelter could see the plant closed, denting power demand and hurting profits at Contact Energy.

The NZX 50 Index declined 11.34 points, or 0.3 percent, to 4411.41. Within the index, 21 stocks fell, 19 rose and 10 were unchanged. Turnover was $110 million.

Contact, the biggest power company on the NZX 50, fell 3.3 percent to $5.51 after Prime Minister John Key said the government had broken off talks with Rio about the price of power supplied by state-owned Meridian. The smelter consumes about 7 percent of the nation's electricity.

"Investors are uncertain if this is just a negotiating ploy or if there's something more solid behind it," says Grant Williamson, a director at brokerage Hamilton Hindin Greene. "It's a bit of a knee-jerk reaction from investors." Contact had a strong gain last week which it has now given back.

Fletcher Building, the biggest company on the NZX 50, fell 1.5 percent to $8.44. The decline has bought the stock back closer to the company's fundamentals but the construction and building materials company needs to show it is benefitting from the rebuild of Christchurch and that demand is recovering in Australia, Mr Williamson says.

Xero, the cloud-based accounting company, rose 2.5 percent to $11.30 and was the biggest gainer on the benchmark index. Ebos Group, the medical and pet supplies company, rose 1.6 percent to $9.48.

Manufacturers were mixed. Nuplex Industries rose 1.5 percent to $3.37 and Skellerup fell 1.4 percent to $1.46.

Retailer Warehouse Group rose 1.2 percent to $3.53 and Sky Network Television gained 1.1 percent to $5.36.

SkyCity Entertainment Group, the casino and hotel company, fell 1.4 percent to $4.35.

Bathurst Resources, the West Australia-based company that gained tentative approval for its Escarpment coal mine on the West Coast's Denniston Plateau last month, fell 7.3 percent to 38 cents after announcing plans to reincorporate as a New Zealand company.

The change will be by way of a scheme of arrangement, with shareholders being issued one share in Bathurst NZ for each existing Bathurst share held, the company said today. The plan needs approval of shareholders and Australian courts and regulators.

Kiwi Income Property Trust fell about 3 percent to $1.135 and Air New Zealand declined 2.3 percent to $1.50.

Telecom rose 1.1 percent to $2.365.

(BusinessDesk)