Shares fall, but pare early losses

New Zealand shares pared losses, with appetite for local stocks bolstered by a robust trading day in Australia, although it wasn't enough to stop the stock exchange from closing in the red.

Xero led decliners as investors booked profits, while Goodman Fielder rose after a sharp fall the previous day.

The NZX 50 Index fell 4.66 points, or 0.13 per cent, to 3460.70. Within the index, 22 stocks fell, 17 rose, and 11 were unchanged. The market saw 21 million shares change hands on the day, and the 90-day bank bill rate was last at 2.65 per cent.

Overnight European and US investors were spooked by reports Spain's economy had slowed to a 0.4 per cent pace, having slumped by 0.3 percent in the first quarter, with fears now rampant that the country will call for a full scale bailout.

Grant Williamson, a director at Hamilton Hindin Greene, said Australia's muted reaction to news of the Spanish growth rates had helped sustain the local market, with solid demand for dual-listed stocks.

Xero, the cloud accounting platform provider, fell 4.6 per cent to $5.25 on the back of what appeared to be profit taking, with the stock hovering around near record highs earlier this week.

Freightways, the express package and information company seen by some investors as a bellwether of the economy, fell 1.8 per cent to $3.81.

Trade Me, the online marketplace platform, fell 1.7 per cent to $3.55.

Telecom, the country's biggest phone company and most traded stock, declined 0.6 cent to $2.53, near the middle of the 10c price band established in early June.

Fletcher Building, the country's biggest construction firm, was unchanged at 5.81 despite high levels of activity, with gains on the back of bargain hunting offset by market pessimism.

"Fletcher is a stock that Australian investors have a fair amount of holdings in and because their market has been losing ground in recent times we've seen a fair bit of selling out of that area," Williamson said.

Goodman Fielder, the consumer food producer, rose 3.3 per cent to 63c off the back of 55,000 shares traded. The bounce comes after the stock posted a 6 per cent decline in the previous session after announcing a A$200 million non-cash write down to the value of its baking brands.

Guinness Peat Group, the investment holding company in the throes of winding itself down, rose 3.1 per cent to 50c.

Chorus, the phone network company currently rolling out the Government's ultrafast and rural broadband projects, rose 0.6 per cent to $3.14.