MARKET CLOSE: Shares rise; MRP, Genesis gain on Tiwai extension

New Zealand shares rose, as Meridian Energy's one-month extension of the Tiwai Point smelter stay-or-close decision renewed investor interest in utility companies. Kathmandu Holdings dropped as Briscoe Group detailed its takeover offer.

The S&P/NZX 50 Index rose 67.4 points, or 1.2%, to 5794.36. Within the benchmark index, 31 stocks rose, 11 fell and eight were unchanged. Turnover was $122 million.

Utility companies rose after Meridian Energy and Rio Tinto-controlled New Zealand Aluminium Smelters extended their electricity agreement for another month, giving the Tiwai Point smelter owner a little more time to sort out its electricity needs. The smelter consumes about a seventh of the nation's electricity, meaning its closure would flood the market with supply and potentially put thermal generation, which has higher marginal costs, under pressure.

Meridian increased 3.2% to $2.23. MightyRiverPower advanced 2.9% to $2.87. Contact Energy gained 1.2% to $5.07. Genesis Energy rose 2% to $1.775. Trustpower edged up 0.4% to $7.65.

"Investors have taken that as a positive that maybe the smelter is doing further negotiations, possibly with other electricity suppliers and maybe even Transpower," Hamilton Hindin Greene director Grant Williamson said. "That's brought renewed interest into all the electricity companies."

Kathmandu Holdings declined 1.1% to $1.73. Briscoe Group launched its full takeover of the outdoor equipment and goods retailer offering 89.7 million of its own shares and $32.3 million cash for the 80.1% of the chain it doesn't already own.

"Kathmandu has come down on the back of that mainly because a good proportion of the consideration is scrip rather than cash," Williamson said. "That's got investors thinking the offer is not quite as attractive as they were first thinking."

Blue chip stocks rose in an international relief rally, as fears about Greece defaulting on its debt and exiting the eurozone eased somewhat, Williamson said. Auckland International Airport rose 4.4% to $5.15. Sky Network Television gained 3.2% to $6.20. Chorus, the network lines operator, advanced 3.4% to $3.00. Casino operator SkyCity Entertainment Group  rose 1.7% to $4.27.

"The Greek situation is continuing but I think investors are coming to realise that it's not going to cause the end of the world whichever way Greece decides to go," Mr Williamson said. "That certainly brought the bargain hunters back into the market."

A2 Milk Co led the benchmark index higher, up 5.6% to 75c. The milk marketing company is also in the midst of a possible takeover bid Freedom Foods, which already has a 19% interest in the milk marketing company.

Fletcher Building, the building supplies and construction firm, was unchanged at $8.12. Spark New Zealand, formerly Telecom Corp, fell 0.4% to $2.785.

(BusinessDesk)