NZ shares follow Wall St higher

The New Zealand sharemarket gained in early trading following a rally by stocks in the United States, after the US Federal Reserve kept monetary policy unchanged, with a nod to an improving economic recovery.

The Fed's pledge to leave interest rates near zero for an extended period of time accelerated the US dollar's decline and helped lift the euro and yen to fresh session highs, with the NZ dollar edging above US71c for the first time in six weeks.

Fletcher Building shares regained early the 6c lost yesterday - when it also reached a two-month intraday high of 829 - to be at 818.

Around 10.15am the benchmark NZX-50 index was up 4.4 points to 3212.2, after losing 23.4 points yesterday.

Shares in market heavyweight Telecom slipped a further 1c to a new low of 216, following yesterday's 4c loss. The telco dropped 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 shares the cost among the industry for uneconomic phone services in rural areas provided by Telecom.

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

Hallenstein Glasson shares rose 2c to 354 and Restaurant Brands shares were up 2c to 192, while Methven dropped 3c to 170, Cavalier Corporation lost 5c to 280, and Sky City was down 2c at 323.

In the US, the Fed's mildly upbeat take on the US economy and its plans to hold interest rates low gave stocks a lift.

The Fed also said in a statement following its meeting on monetary policy that businesses were spending "significantly" more on equipment and software. The central bank gave a marginally more upbeat assessment of the job market, though it said employers remained reluctant to hire.

The Fed also said it still planned to stop buying mortgage-backed securities from Fannie Mae and Freddie Mac at the end of the month.

"We are passing through a historic phase where the Fed's emergency responses to the Great Recession are now behind us and we're incrementally getting back to business as usual," said Robert Dye, senior economist at PNC Financial Services Group in Pittsburgh.

Wall St rose earlier after the Standard & Poor's credit rating agency signed off on Greece's plan to slash its budget deficit.

The Dow Jones industrial average gained 0.4 percent to 10,685.98, the Standard & Poor's 500 index rose 0.8 percent to 1159.46, while the Nasdaq composite index rose 0.7 percent to 2378.01.

- NZPA