MARKET CLOSE: NZ shares rise led by Fletcher ahead of earnings

New Zealand shares rose led by Fletcher Building ahead of its earnings report next week. Outside the NZX 50 Index, Michael Hill International jumped to a two-month high after posting a 46 percent gain in first-half profit.

The NZX 50 Index rose 37.225 points, or 0.6 percent, to 5786.54. Within the index, 27 stocks rose, 12 fell and 11 were unchanged. Turnover was $226 million.

Fletcher advanced 3.3 percent to a near four-month high of $8.75, as $31.8 million worth of its shares changed hands. The construction and building supplies company is due to report its first-half earnings next week, with First NZ Capital expecting a 9 percent increase in net profit after tax to $187 million. The company is expected to benefit from a ramping up of housing construction in Auckland and a peak in building activity in earthquake devastated Canterbury, while its Australian operations are weighed on by the strength of the kiwi dollar and a slowing economy across the Tasman.

"It's almost like people are buying ahead of the result," said Rickey Ward, NZ equity manager at JB Were. "It's a rather large company now and it's incredibly diversified and as a result the benefit of trying to smooth things out means not everything operates in an upwards trend at the same time and I think that will very much be the focus of the result, but it's certainly well bought today."

Outside the benchmark index, Michael Hill climbed 4.4 percent to $1.20 after jumping as much as 7 percent after the jewellery chain posted a 46 percent rise in first-half profit to A$23.7 million. The company remains in dispute with New Zealand tax authorities regarding financing arrangements between New Zealand and Australia through 2009 to 2013 when it claimed tax deductions of $31 million and considers it "increasingly likely" that the issue will require formal resolution through the courts.

"It was a pretty good result and the share price reaction reflects that as it has been a stock under pressure lately," Ward said. "The overwhelming issue which has been hanging around for some time really has been resolution to that tax situation and that's not completed."

New Zealand Oil and Gas climbed 3.2 percent to 65 cents. The oil exploration company has made an offer for ASX-listed Cue Energy Resources at 10 Australian cents a share, in a bid to diversify away from its diminishing Tui oilfield. Cue directors today rejected the takeover mounted by NZOG, saying it "substantially undervalues" the company and may see unproven exploration opportunities sacrificed in favour of immediate cashflow from producing assets in New Zealand.

"That's a company that's almost cash rich asset poor," Ward said. "They've got good cash flow but they've got to diversify as they're reliant on one asset."

Vital Healthcare Property Trust was the worst performer on the NZX 50 Index, falling 1.2 percent to $1.62.

Spark New Zealand, formerly Telecom Corp, rose 0.5 percent to $3.33.

Xero, the cloud-based accounting software firm, rose 0.3 percent to $16.20, as $41.8 million worth of shares changed hands.