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NZX Down 0.8pct Early, Despite Weekend Of Global Crisis Meetings

Fuseworks Media
Fuseworks Media

Wellington, Oct 13 NZPA - Despite a weekend of international financial crisis talks, New Zealand investors appear to have remained despondent with the sharemarket losing more ground in early trade.

The fall in the market also came after Prime Minister Helen Clark announced yesterday the Government was moving to guarantee all bank deposits for two years, for banks which opt into the scheme.

The Government's liability could be up to $150 billion.

Finance Minister Michael Cullen said New Zealand had been in the uncomfortable position of being the only western country not offering any guarantee on deposits.

Among leading stocks, Telecom was down 5c to 251 in early trading, while Contact Energy dropped 8c to 712, although Fletcher Building gained 9c to rise to 595.

The few other early risers included Sky City up 2c to 295, Port of Tauranga up 2c to 620 and dual-listed ANZ Banking Group up 13c to 1740.

Nuplex was down 30c to 470, Sanford lost 50c to 479, while Tower was down 10c to 135, and the New Zealand Refining Co lost 25c to 550.

Around 10.20am, the benchmark NZSX-50 index was down 21.85 points, or 0.78 percent, to 2783.47. On Friday it had fallen 139 points, or 4.7 percent.

United States equities ended last week with the Dow Jones industrial index lurching back and forth in a 1000-point range. Volume on the New York Stock Exchange was more than double the average of 2008 so far.

"A lot of people look at this crazy selling and believe we are forming a bottom, particularly when you have all this despondency, capitulation and utter despair.

"But then...people are still scared and selling," said Brian Gendreau, an investment strategist in New York for ING Investment Management Americas.

On Friday (local time) the Dow Jones industrial average fell 1.49 percent to 8451.19, while the Standard & Poor's 500 Index dropped 1.18 percent to 899.22, although the Nasdaq Composite Index edged up 0.27 percent to 1649.51.

For the week, both the Dow and the S&P 500 fell 18 percent, while the Nasdaq slid 15.3 percent.

Traders cited margin calls and forced liquidations as a key contributor to the week's sell-off in stocks.

During the weekend, leaders of the 15 eurozone nations agreed in Paris on a joint strategy to bolster market confidence by underwriting inter-bank loans and safeguarding financial institutions from collapse.

In Washington, US President George W Bush met G7 economic chiefs and officials from the IMF and World Bank, but they failed to agree on concrete measures to end the crisis.

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