Sharemarket falls as oil prices rise on supply worries

Wednesday 2nd March 2011

The New Zealand sharemarket fell quickly in early trade, after stocks in the United States dropped as oil prices shot up on worries about supply disruptions, fanning concerns about a dampening effect on economic growth.

Around 10.15am the benchmark NZX-50 index was down 9.78 points to 3374.61, having gained 13.9 points yesterday.

Fletcher Building (NZX: FBU ) shares were down 16c to $5.8, having lost 3c yesterday, after a shareholder and member of the founding family of Australia's Crane Group urged fellow investors to reject Fletcher's takeover offer ahead of a March 11 bid deadline.

Telecom (NZX: TEL ) shares fell 2c early to $2.13 giving up some of the 7c gain made yesterday, while among other key stocks Contact Energy (NZX: CEN ) fell 2c to $6.15.

Sanford (NZX: SAN ) was down 4c early to $5.00, Kathmandu Holdings (NZX: KMD ) lost 5c to $2.04, Steel & Tube (NZX: STU ) was down 4c to $2.56, and Mainfreight (NZX: MFT ) shed 3c to $8.11.

OceanaGold (NZX: OGC ) added 10c to $3.65 and The Warehouse (NZX: WHS ) was up 2c to $3.47.

In the US, concerns that rising oil prices could hurt economic recovery prompted investors to sell stocks and hedge against further declines.

The CBOE Volatility Index VIX, Wall Street's so-called fear gauge, jumped 13.3% to 20.79 on growing uncertainty about oil.

Brent crude oil pushed back above US$115 a barrel as supply disruptions persist and unrest spreads in the Middle East and North Africa.

On preliminary figures, the Dow Jones industrial average dropped 1.4% to 12,057.72, the Standard & Poor's 500 Index dropped 1.6% to 1306.28, and the Nasdaq Composite Index dropped 1.6% to 2737.41.

NZPA

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