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MARKET CLOSE: NZ shares fall led by Fletcher on outlook; Meridian rises to record

New Zealand shares fell led by Fletcher Building, after the company said full-year earnings would be at the lower end of guidance. Meridian Energy rose after posting a 26 percent increase in first-half profit.

The NZX 50 Index fell 8.852 points, or 0.2 percent, to 5741.359. Within the index, 18 stocks fell, 19 rose, and 13 were unchanged. Turnover was $199 million.

Fletcher fell 5 percent to $8.30. The construction and building products company posted a 26 percent drop in first-half profit to $114 million, omitted franking credits on dividend payments to Australian investors and said full-year earnings would be at the lower end of guidance. The company said today that operating earnings for the full year would be toward the lower end of the $650 million to $690 million guidance it gave in October, "due to the rapid deterioration in the mining and infrastructure sectors in Australia".

"The second half is quite a decent stretch to hit the previous guidance numbers," said David Price, head of institutional broking at Forsyth Barr. "Some of the commentary around that there could be further impairment out of Australia and Australia is challenging, so to get that uplift in the backdrop of that will see people cutting their earnings expectations for both the current year and next year.

Meridian rose 4.2 percent to $1.98 having risen to an intraday high of $2. The government controlled energy company lifted first-half earnings 21 percent to $324.3 million as it widened margins and clamped down on costs, and has flagged capital returns for shareholders over the next five years, including a special 1.4 dividend with today's report. The board declared an interim dividend of 4.8 cents per share.

"I don't think there should be any surprise on the dividend," Price said, as it needed to use up imputation credits that would otherwise be lost in May when the Crown transfers shares to instalment receipt holders. "The guts of it is that it was a just a very solid result and they have upped what the payout ratio will be going forward."

Trade Me Group rose 2.2 percent to $3.70. New Zealand's largest online auction site posted profit growth of 1.1 percent to $38.4 million in the first half, a slower pace than early years as increased investment ramped up costs and only one of its core businesses lifted earnings.

New Zealand Oil & Gas was unchanged at 62 cents. The exploration company turned in a loss in its first half of $10.5 million, from a profit of $4 million a year earlier, after the global drop in oil prices saw it recognise a $13 million write down on its Tui oil field.

Xero was the best performer on the benchmark index, up 5.3 percent to a near three-month high of $17.27. The cloud-based accounting firm came under selling pressure which saw its shareprice drop from a high of $45.99 in March to as low as $15 as investors mulled the outlook for growth, particularly in the US. A single investor had been "sitting on the stock quite a lot, whether they've taken their foot off which has seen a bit of the sell pressure easing," Forsyth Barr's Price said.

Spark New Zealand, formerly Telecom Corp, fell 0.2 percent to $3.31.

On the ASX, Toll Holdings jumped 47 percent to A$8.92 after Japan Post, the state-owned postal service operator, has launched a A$6.5 billion takeover bid, at A$9.04 per share, for the Australian logistics firm which it's board has unanimously recommended.