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MARKET CLOSE: NZ shares increase as oil price recovery fuels equities; Skellerup gains

New Zealand shares edged up as the ongoing recovery in oil prices stoked investors' demand for worldwide equity markets. Rubber goods maker Skellerup Holdings led the local market higher.

The NZX 50 index increased 3.373 points, or 0.1 percent, to 5785.319. Within the index, 29 stocks gained, 18 fell, and three were unchanged. Turnover was a higher-than-average $193.7 million.

Stocks across Asia gained, following Wall Street higher, after oil prices continued to rise, stoking optimism about the strength of the global economy. Japan's Nikkei 225 index was up 2 percent in afternoon trading, while Hong Kong's Hang Seng gained 0.9 percent and Australia's S&P/ASX 200 index rose 1.1 percent.

New Zealand's gain was more muted than its peers, which were largely driven by energy stocks, something the local bourse lacks. The looming earning season also tempered those gains. Exploration company New Zealand Oil & Gas advanced 0.8 percent to 65 cents.

"Volumes, apart from a couple of stocks, was relatively light ahead of reporting season," said James Smalley, a director at Hamilton Hindin Greene. On the hold, it's a little disappointing given the bounce back in overseas markets."

Skellerup led gainers on the day, rising 3.8 percent to $1.38, while Guinness Peat Group advanced 3.3 percent to 47.5 cents.

Spark New Zealand, formerly Telecom Corp, gained 2.7 percent to $3.46 after the telecommunications firm entered into a joint venture with ASX-listed Vocus Communications to build fibre and telecommunications assets.

Chorus, the network operator spun out of Telecom, rose 2.6 percent $2.78, its highest close since September 2013.

Smalley said investors have become more comfortable with the regulator regime Chorus is operating in, having punished the stock when it faced the most uncertainty.

Air New Zealand fell 3.8 percent to $2.54 as oil prices continued to recover. The national carrier has been benefiting from cheap fuel costs in recent months, and the turnaround in oil prices will increase its input costs. Likewise, Z Energy, which also counts oil as an input cost, slipped 1.2 percent to $4.90.

The gain in oil prices prompted a sell off in global bonds, pushing up their yields and making stocks with dependable dividends less attractive.

"This massive quest for yield has led to significant offshore purchases of the large-cap yielders," said Matt Goodson, managing director of Salt Funds Management. "US 10-year Treasuries were sold off by about 13 points, so for the first time in a few days that quest for yield came to a little halt."

Electricity generator and retailer Meridian Energy fell 1.8 percent to $1.955, while Contact Energy dropped 1.4 percent to $7.20 and MightyRiverPower declined 0.6 percent to $3.47.

Kathmandu Holdings fell 4.1 percent to $1.40, extending its decline to a new two-and-a-half year low as investors question whether it will be able to bounce back from its profit warning earlier this week.

"The real concern is not so much with the sales figures, but with gross margins," Goodson said. "It's critical for them to have good Easter and winter sales, which is weather dependent."

SkyCity Entertainment Group declined 2.8 percent to $3.81. The casino and hotel operator has been downgraded by several analysts in recent weeks, and Goodson said there are questions around its Australian businesses, which will also be under pressure with the strong kiwi dollar against its trans-Tasman counterpart.

Units in the Fonterra Shareholders' Fund, which have exposure to dairy exporter Fonterra Cooperative Group's dividend stream, fell 1.7 percent to $5.73. Prices at Fonterra's online auction rose, which puts downward pressure on the exporter's earnings.

A2 Milk Co was the biggest decliner on the NZX 50, falling 5.8 percent to 49 cents. Synlait Milk, the dairy processor, rose 0.6 percent to $3.33.

Fletcher Building, the biggest company on the exchange, rose 0.6 percent to $8.52, while Auckland International Airport slipped 1.1 percent to $4.45 and Ryman Healthcare declined 0.2 percent to $8.20.

NZX rose 0.8 percent to $1.21 after reporting a fall in the volume of trading in January, though an increase in the value traded.