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Tower tumbles, takes local shares with it

NZ NewswireNZ Newswire 24/05/2016 Sophie Boot

Air New Zealand shares have fallen to an 18-month low. © Brendon O'Hagan/Bloomberg Air New Zealand shares have fallen to an 18-month low. New Zealand shares fell as Tower tumbled after reporting a wider full-year loss and Air New Zealand dropped to an 18-month low while Kathmandu Holdings recovered on optimism a cold snap across the country will boost sales of winter clothing.

The S&P/NZX 50 Index dropped 35.12 points, or 0.5 per cent, to 6,872.65. Within the index, 28 stocks fell, 15 gained and seven were unchanged. Turnover was $171.5 million.

Tower led the index lower, dropping 11.9 per cent to a three-month low of $1.56 after the general insurer posted a wider first-half loss of $8.7m, including an impairment charge against IT, and little changed gross written premium income, raising questions about its ability to compete with larger rivals.

"It was probably $3m worse than we expected," said David Price, a broker at Forsyth Barr.

"The general insurance market is relatively flat, there's increased competition and increasing claims."

Air New Zealand fell 2.8 per cent to $2.06, the lowest since November 2014.

It has dropped 20 per cent since March 30 when it announced it had hired investment bankers to look at a sale of its 26 per cent stake in Virgin Australia, less than a fortnight after committing to a one-year, A$131.2 million loan to the airline, and has faced increased competition as oil prices have slumped to record lows.

Metro Performance Glass dropped 2.7 per cent to $1.83, Sky TV shed 2.6 per cent to $4.16, and Spark declined 2.4 per cent to $3.645.

A2 Milk fell 1.9 per cent to $1.56.

Kathmandu Holdings was the best performer, up 4.8 per cent to $1.52, having fallen to a seven-month low of $1.43 last week.

"It's probably up for the same reason it was down - people looked out the window," Price said.

Heartland Bank gained 1.7 per cent to $1.22 and Orion Health Group rose 1.3 per cent to $4.62.

Outside the main index, Vista Group International rose 2.2 per cent to $5.98. The cinema software and analytics firm has inked its first deal to provide its cinema software to theatres in Africa. The shares were sold in the 2014 initial public offering at $2.35 apiece.

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