Market closes in the red

Stockmarket close

A new low for Telecom, after the company outlined the cost of the latest government reforms, helped push the New Zealand sharemarket into the red in an otherwise quiet session.

The benchmark NZX-50 index closed down 23.4 points, or 0.7 percent, at 3207.8, after Telecom shed 1.8 percent, or 4c, to 217.

The stock fell after confirmation of the Government's plans to fund its broadband internet roll-out to rural areas mostly through the reform of the Telecommunications Service Obligation, which recompenses Telecom for uneconomic phone services in rural areas.

Telecom said the changes would cost it up to $56 million in earnings before interest, tax, depreciation and amortisation a year for 2011-2013.

"Obviously that Telecom announcement has certainly helped our market go lower, but in general there's low turnover all round," said Stephen Wright of ASB Securities.

Fletcher Building, which confirmed today that former chief executive Ralph Waters would replace Roderick Deane as chairman, lost 6c to 812.

Contact Energy was down 6c at 606, Auckland International Airport fell 2c to 195, Sky City fell 3c to 325, and Sky TV lost 10c to 500.

Fisher & Paykel Appliances gained a cent to 65, and F&P Healthcare fell 4c to 323.

NZ Refining jumped 21c to a one-month high of 361 after reporting "significant" improvement in refinery margins in the first two months of 2010, having started to show some recovery in December.

"Even they really can't predict how refining margins will go because they can be fairly variable, but it's good to see they've jumped up dramatically since the September-December period when they were down at 118-125," Mr Wright said.

Also on the rise were Pumpkin Patch, up 2c at 220, Mainfreight, up a cent at 619, and ING Property, up a cent at 75.

Discount retailer The Warehouse fell 5c to 385, Trustpower fell 5c to 720, and PGG Wrightson was down 2c at 57.

Australia's S&P/ASX 200 Index was up nearly 2 percent at 4786 after the release of comments from the Reserve Bank of Australia, while Japan's Nikkei share average was down 0.1 percent.

Earlier on Wall Street, US stocks rebounded slightly on a late gain in banking shares after Senate Banking Committee Chairman Christopher Dodd released a proposed financial regulation overhaul bill that investors said did not offer any surprises for the sector.

- NZPA