Market heads for another day of declines

Midday Update

New Zealand Oil & Gas led decliners on the NZX 50 Index as the price of crude oil fell and offshore equity markets weakened. Guinness Peat Group fell to a two-month low.

The NZX 50 fell 14.533, or 0.5 percent, to 3022.281 as at midday, heading for its third daily decline in five sessions.

On Wall Street, the Standard & Poor's 500 Index dropped 1.5 percent amid concern the economic recovery is faltering.

NZ Oil & Gas declined 1.7 percent to $1.15 after crude oil fell for the first time in four days after US Commerce Department figures showed growth in personal incomes rose a less-than-expected 0.2 percent, adding to signs growth in the world's largest economy is running out of puff.

Crude for October delivery traded at US$74.70 a barrel on the New York Mercantile Exchange.

Guinness Peat fell 1.6 percent to 62 cents, nearing the nine-year low charted in late June.

The company looks to have abandoned plans to spin off its Australian interests after opposition from institutions.

Fletcher Building, New Zealand's biggest construction company, fell 1.5 percent to $7.50.

As many as 20,000 jobs could be lost in the commercial construction sector, says NZIER principal economist Shamubeel Eaqub.

The sector is "on the precipice of collapse," following a sharp contraction in building consents for commercial buildings issued over the last year.

Adding to the gloom, New Zealand residential building consents, excluding apartments, fell 5.3 percent last month, after a 1.1 percent rise in June, according to data released by Statistics New Zealand today.

The New Zealand dollar fell after South Canterbury Finance, the nation's second-largest finance company, was put in receivership after failing to reach a deal for a rescue, triggering a gross payment under the government guarantee of $1.6 billion.

The kiwi dropped to 70.12 U.S. cents after SCF's announcement from 70.98 cents yesterday.

South Canterbury chief executive Sandy Maier said the appointment of receivers Kerryn Downey and William Black of McGrathNicol was inevitable once it became clear talks for new money wouldn't be completed by the close of business today, when its trust deed waiver expired.

The collapse means the government faces a net liability in the ball-park of $600 million to cover SCF's 35,000 eligible investors, once the receiver has clawed back cash from asset sales.

Maier "has been acting like a quasi receiver for some time - trying to sell assets and extract them from whatever loans they can do" and the receiver will continue to do that, said Fergus McDonald, fixed-income manager at Tyndall Investment Management.

ANZ National Bank chief executive Jenny Fagg is to step down immediately from the role to undergo cancer treatment, the nation's biggest lender announced today.

The bank's current deputy chief executive, Steven Fyfe, will step up to lead operations in New Zealand effective from Thursday.

Genesis Research and Development Corp., the Auckland-based biotechnology company which was forced to halt operations last year after running out of cash, fell 1.9 percent to 4.5 cents after announcing it had narrowed losses.

The company today posted a net loss $511,000, or 1.37 cents per share, compared to a loss of $1.2 million, or 4.61 cents.

The company also said it may also get another cash injection from new cornerstone investor, May Wang.

MightyRiverPower, the state-owned electricity generator and retailer, reported substantially reduced earnings in the year to June 30, with underlying earnings falling 34 percent to $139.6 million, compared with a record $211.7 million last year.

The conditions that produced the previous year's result - a coincidence of high Waikato hydro system inflows and high wholesale power prices - reversed in the year under review, with a severe Waikato catchment drought coinciding with high spot prices.

- BusinessDesk