Market close: Shares rally, paced by Fletcher and Nuplex, on Australian growth

BUSINESSDESK: New Zealand shares rose after economic growth in Australia, the nation’s biggest trading partner, beat estimates and prices of dairy products rebounded from a three-year low.

Fletcher Building, Nuplex Industries and Kathmandu paced the rally.

The NZX 50 Index rose 43.72 points, or 1.3%, to 3464.51. Within the index, 32 stocks rose, 11 fell and seven were unchanged.

Turnover was a lower-than-average $53.7 million.

Australia’s economy grew 1.3% in the first quarter, more than twice the 0.6% pace forecast by economists.

The report helped lift the S&P/ASX 200 Index off its lows and lifted stocks of New Zealand companies that garner revenue across the Tasman.

A 13.5% gain in prices of dairy products, the nation’s biggest export, in Fonterra’s GlobalDairyTrade auction also helped sentiment.

Fletcher, which counts Australia as its second-largest market, climbed 2.6% to $6.30.

Kathmandu, the outdoor equipment chain that gets the largest portion of its sales in Australia, rose 7.9% to $1.50.

Strong Australian GDP and the lift in dairy product prices “has given some confidence to our market”, said Peter McIntyre, an adviser at Craigs Investment Partners.

Speculation that Federal Reserve chairman Ben Bernanke will announce a third round of stimulus when he addresses the US Congress tomorrow is also giving markets a “risk-on tone”, he said.

Goodman Fielder, the Australasian food maker, rose 6.9% to 77 cents.

Nuplex Industries gained 7.2% to $2.39. The specialty chemicals company this week said earnings this year would about match its 2011 results – the low end of its prediction that growth would be “flat to 5% year on year”.

“The Nuplex guidance was at least not off the end of the scale,” Mr McIntyre said. “That’s given the market some confidence.”

Telecom, the biggest company on the bourse, rose 1.6% to $2.475, making up some of the ground lost yesterday when rival Telstra said it was in talks with Vodafone to sell its TelstraClear unit in New Zealand, a move that would produce a stronger competitor.

OceanaGold, the operator of the Macraes gold field, rose about 7% to $2.77 as spot gold held near a month-high at $US1624.06 an ounce.

NZX, the stock exchange operator, rose 5% to $1.26. Mr McIntyre said the prospect of state-owned enterprises coming to the market may be buoying the shares.

Xero, the online accounting company, rose 0.5% to $4.10 and Diligent Board Member Services rose 4.9% to $3.41. The two companies will be added to the NZX 50 Index effective June 8, the NZX said today.

Kirkcaldie & Stains, the Wellington department store and property company, rose 3.6% to $2.90 a day after the Cushing family disclosed a holding of almost 20%.

Pumpkin Patch, the children’s clothing chain, was the biggest decliner, falling 4.4% to 87 cents. Rakon, which makes components for navigation systems and smart phones, fell 3.9% to 49 cents.