Predicted building demand lifts market

Midday Update

BY JONATHAN UNDERHILL

Steel & Tube Holdings and Fletcher Building led gainers on the NZX 50 Index, amid expectations the earthquake in Canterbury will stoke demand for building materials and construction.

NZ Oil & Gas rose after announcing a buyback.

The NZX 50 gained 23.29, or 0.8 percent, to 3130.723 as at midday, heading for its fourth straight daily advance.

Helping set a positive tone, shares rallied on Wall Street on Friday after figures showed the US economy shed 54,000 non-farm jobs last month, about half the number expected.

Steel & Tube climbed 5.9 percent to $2.33.

The Earthquake Commission has initially assessed the costs of claims for the Canterbury quake at $2 billion.

That's equivalent to 26 percent of New Zealand's total annual construction expenditure, according to Westpac Institutional Bank, and comes amid predictions of a severe downturn for commercial construction.

Fletcher Building rose 4.4 percent to $8.09.

Tower, the insurance and funds management company, sank 3.7 percent to $1.84.

The company said today the cost of claims from the earthquake will be $5 million before tax or $3.5 million after tax.

Pike River Coal rose 0.9 percent to $1.10 after saying it managed to load its 20,000 tonne second export shipment of hard coking coal at Lyttelton Port Co. despite some damage at the wharves.

The Midland railway line, which links its West Coast mine with the port, "suffered some track damage" though it re-opened yesterday afternoon.

NZ Oil & Gas gained 4.2 percent to $1.25.

The oil and gas company plans to buy back up to 2.2 percent of its issued capital, or 8.5 million ordinary shares, to bolster a share price directors say is "significantly below fair value."

"The NZOG board is of the view that the current share price is significantly below fair value and doesn't reflect a reasonable current valuation of the company, even without taking into account the growth prospects about which the board and management are confident," the company said.

DNZ Property Fund was unchanged at $1.04, holding its highest level since the stock exchange debut last month.

The property fund today announced the conditional sale of a property on the corner of Tauroa Street and State Highway One in Whangarei for $13.6 million.

Proceeds will be used to repay bank debt.

The earthquake caused "localised damage to milking facilities and temporary shutdowns to some milk processing facilities," NZX's Dairy Trader report said today, noting that it followed the collapse of South Canterbury Finance, a major funder of the region's dairy expansions.

"While the earthquake and collapse of the finance company will pose major challenges for a number of dairy farms, the effect on New Zealand's dairy industry as a whole will be minimal as lending will be refinanced elsewhere and milk will continue to flow," the report said.

Canterbury accounts for about 12 percent of New Zealand's dairy production.

The New Zealand dollar has gained from its close in New York on Friday, emerging relatively unscathed from the earthquake, having gained after the better-than-expected US non-farm payrolls.

America shed 54,000 jobs last month, almost half of what was expected, stoking investors' appetite for risk-sensitive currencies such as the kiwi and Australian dollars.

The kiwi climbed to 71.97 US cents from 71.56 cents on Friday in New York, and edged up to 66.77 on the trade-weighted index of major trading partners' currencies from 66.57.

The New Zealand dollar will probably trade in a tight range this week according to five of seven strategists in a BusinessDesk survey.

The Christchurch earthquake pared gains from upbeat investor sentiment after a strong US employment figure on Friday, and economists predict the overall impact of the natural disaster will probably see a net gain for the currency in coming months as insurers buy New Zealand dollars to pay out customers while the Earthquake Commission repatriates offshore funds.

With little on the data front this week, traders will be keeping an eye on central bank meetings in Australia, Japan, Canada and England.

- BusinessDesk