Firm start by NZ sharemarket

Friday 4th February 2011

Shares in farming services company PGG Wrightson rose in early trading after news of a possible second bidder, while Tourism Holdings fell sharply after advising the market of a "sudden and severe" revenue drop last month.

PGG Wrightson (NZX: PGW ), the subject of a partial takeover bid by shareholder Agria, today said it had been approached by another "bona fide potential bidder" and had agreed to a request from the party to carry out due diligence.

Shares in the company opened up 4c, but within a few minutes the gain had been cut to 2c, taking the share price to 57.

Tourism Holdings (NZX: THL ) shares were down 14c, or 19%, to 60 early, after the company said it did not expect to be in compliance with banking covenants in the March 2011 quarter, and cut its full year forecast to a $4 million loss from a $2.5 million net profit previously forecast.

A severe and sudden drop in revenue intakes - forward bookings - during the key January booking month had created significant uncertainty for the rest of the financial year, THL said.

The broader market started the day firmly, with the benchmark NZX-50 index up 10.13 points to 3360.02 around 10.15am, having slipped 2.4 points yesterday.

Among leading shares, Telecom (NZX: TEL ) gained 3c to $2.23, and Fletcher Building (NZX: FBU ) lifted 4c to $7.95, but Contact Energy (NZX: CEN ) fell 3c to $6.19.

Sky TV (NZX: SKT ) rose 2c to $5.35, and NZ Refining Co (NZX: NZR ) added 2c to $4.95, while Sky City (NZX: SKC ) was down 2c to $3.35.

In the US, stocks ended near session highs, with investors favouring shares of retailers after encouraging chain-store sales raised confidence.

Based on the preliminary data, the Dow Jones industrial average gained 0.2% at 12,062.18, the Standard & Poor's 500 Index was up 0.2% at 1307.10, and the Nasdaq Composite Index was up 0.2% at 2753.88.

NZPA

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