NZ share market edges higher

NZ Farming Systems Uruguay rose after the dairy farm developer said its suitor Olam International would assist with funding to complete its existing farms. Telecom edged as the government signaled it may yet have a role in its ultra-fast broadband rollout.

The NZX 50 rose 2.21, or 0.07 percent, to 3153.981 as at midday, heading for its third daily decline. The index has retreated from a four-month high reached on September 7.

Farming Systems gained 1.5 percent to 70 cents after saying Olam will contribute to the US$60 million cost of developing existing farms in South America as part of its takeover offer.

Telecom edged up about 1 percent to $2.04, having tumbled about 5 percent yesterday on the government's announcement that three competing regional broadband proposals would get priority over Telecom's nationwide plan.

The ball is now in Telecom's court to advance its alternative proposal to partner in the government's $1.5 billion urban UFB roll-out, say Communications Minister Steven Joyce and Crown Fibre Holdings Ltd. chairman Simon Allen.

Pike River Coal fell 1.8 percent to $1.08 after the coal miner said chief executive Gordon Ward, who led the project from its initial conceptual design 14 years ago and had been CEO since May 2007. No reason was given for his departure from the company, which has seen its production schedule delayed by additional development and repair work at the site.

Air New Zealand was unchanged at $1.26 after the airline's plan for a trans-Tasman alliance with Virgin Blue was knocked back by Australia's antitrust regulator.

Allied Farmers jumped 33 percent to 3.6 cents after announcing the settlement of the sale of its Five Mile property near Queenstown Airport earlier than expected, with the proceeds used to repay debt.

Allied's term debt facility with Westpac Banking Corp. has been reduced to $5.4 million from $14.2 million as a result of the sale and will reduce further to $2 million as a result of a court ruling in another case, said managing director Rob Alloway.

Warehouse Group, the biggest retailer on the NZX 50, was unchanged at $3.69, paring an earlier gain. The company today posted a 2.3 percent decline in full-year earnings, before one-time items, on weaker sales of compact disks and DVDs.

Earnings fell to $83.2 million, missing the $84 million forecast in a Reuters survey as its profit margin shrank 90 basis points to 3.6 percent.

Receivers for the failed South Canterbury Finance Ltd. moved to reassure the company's borrowers that their funding support is confirmed as long as they "meet the SCF Group's lending criteria."

Receivers Kerryn Downey and William Black, of advisory firm McGrathNicol, also reported ongoing interest from potential buyers of SCF's assets.

"These enquiries are being recorded in registers of interest held by the Crown and the receivers," their statement said. Advanced discussions were under way with up to three bidding parties before trust deed exemptions expired for SCF on Aug. 31, triggering receivership and a government bail-out under the retail deposit guarantee scheme.

New Zealand's terms of trade rose less than expected in the second quarter, as prices rose for exports such as dairy products, logs and meat, outpacing gains in imports.

The terms of trade rose 2.1 percent in the three months ended June 30, according to Statistics New Zealand. That's less than half the gain forecast in a Reuters survey of 4.5 percent. Export prices rose 3.8 percent against a forecast gain of 5 percent, while import prices climbed 1.7 percent, about twice the expected increase.

The terms of trade shows how much imports can be bought for a set amount of exports compared to the preceding three months. An improving trade position is a sign that the economy is rebalancing away from domestic consumption toward export growth, which the central bank says is a healthy shift.

The gain in export prices was led by a 6 percent gain in dairy products, 4.5 percent rise in meat, 4.8 percent gain in forest products and 4.8 percent advance in petroleum products. Import prices were led by a 4.7 percent gain for petroleum, 4.3 percent rise for food and beverages and 10 percent rise in non-fuel crude materials.

The New Zealand dollar pared its gains from a month-high to be little changed at US72.47c from US72.52c yesterday and was at 67.38 on the trade-weighted index of major trading partners' from 67.31. The currency weakened amid concerns European banks may struggle to meet new capital requirements to be discussed at Basel III this weekend.

Central bankers and banking supervisors meet in Switzerland this weekend and are expected to set minimum requirements for the amount of top quality capital banks have to hold against future losses.

- BusinessDesk