Shares fall on Euro zone uncertainty

21:38, Feb 04 2013

New Zealand shares fell in morning trade, following overseas equities down as a Spanish corruption scandal threatened to unsettle the stability of the euro zone.

The NZX 50 Index fell 11.22 points or 0.26 per cent to 4,235.18 in the first 30 minutes of trade. Within the index, 11 stocks fell and three rose.

Fletcher Building fell and Pumpkin Patch rose.

The New Zealand dollar recently traded at US84.29 cents, down from US84.43c at 8am this morning and US84.55c at 5pm yesterday.

Spain's prime minister Mariano Rajoy faces calls to resign over allegations made in the media that he had received payments from a slush fund, though he denies any wrongdoing. Spanish 10-year bond yields climbed to six-week highs on the news.

Meanwhile, Italian polls showed that former prime minister Silvio Berlusconi was regaining popularity, threatening the reforms put in place by the outgoing government.

The signs of further instability in the delicate euro zone were enough to send European equities tumbling overnight, with global markets also taking some heat.

The FTSEurofirst 300 closed down 1.5 percent, its lowest point since last year. Spain's IBEX fell 3.8 percent, and Italy's FTSE MIB dropped 4.5 percent.

The risk-off sentiment was reflected in the muted open of the local bourse, where Fletcher Building led the way down through thin trading. The construction giant fell for a second day, shedding 1.2 per cent to $9.08.

Air New Zealand, the national carrier, fell 0.8 per cent to $1.28.

Ryman Healthcare, the retirement village operator, fell 0.6 per cent to $4.65. Infrastructure investment firm Infratil fell 0.6 per cent to $2.47.

New Zealand Oil and Gas, the energy exploration firm, fell 0.5 per cent to 95c.

Children's clothing chain Pumpkin Patch was the only gainer of note at the open, up 0.7 per cent to $1.39.