Wellington, April 28 NZPA - The sharemarket surged nearly 1 percent today on the back of an 11-week high for top stock Telecom and a decline in the New Zealand dollar.

The benchmark NZSX-50 index closed up 22.1 points at 2686.44, after yesterday's more modest eight-point gain. Turnover totalled $81.1 million.

"The lower dollar is helping, and also the Fonterra news is helping to bring a bit of buying into the market," said Hamilton Hindin Greene partner Grant Williamson.

Unlisted dairy giant Fonterra Co-operative today announced a 10c increase in its forecast payout to $5.20 per kg of milk solids. That was still significantly less than the record $7.90 received last season by Fonterra's 10,700 farmers.

Telecom rose 8c to 271, its highest level since early February.

Today, the telco proposed two options to achieve the Government's broadband goals, including co-ordinating government investment with Telecom's current fibre network and future fibre plans.

That followed Telecom's announcement yesterday that it would open its new 3G mobile network earlier than expected, in mid-May rather than June.

Buyers chased other blue chip stocks, boosting Fletcher Building by 14c to 638, Sky TV by 8c to 408, and Fisher & Paykel Healthcare by 6c to 301.

F&P Healthcare was aided by a drop in the New Zealand dollar on the back of growing concerns for world trade and consumer confidence if a swine flu epidemic develops.

Sky City rose 2c to 275, Auckland Airport fell a cent to 166, F&P Appliances rose a cent to 45, and Contact Energy fell 5c to 555.

NZ Farming Systems Uruguay lost 3c to 68 after cutting its annual earnings forecast again, to $US20m ($NZ36.7m), due to drought in Uruguay.

Shareholder PGG Wrightson was up 2c at 127.

Also on the rise were Hallenstein Glasson, up 7c at 254, Steel & Tube, up 10c at 265, NZX, up 7c at 682, and Tourism Holdings, up 2c at 47.

NZ Refining lost 12c to 680, Rakon fell 3c to 129, Port of Tauranga was down 5c at 550, and Ebos fell 5c to 470.

Across the Tasman, Australia's S&P/ASX 200 Index was down 0.4 percent at 3708, while Japan's Nikkei share average shed 2.7 percent.

Earlier on Wall Street, stocks fell on concerns that the spreading of a new strain of flu could dampen optimism about the US economy, outweighing the effects of General Motors' overhaul and gains in biotechnology stocks.

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