Fonterra Fund recovers; the chase for yield continues

The S&P/NZX 50 Index rose 57.19 points, or 0.5 percent, to 10,615.47. Within the index, 33 stocks gained, 11 fell and six were unchanged. Turnover was $134.4 million.

Fonterra fund units led the market higher, up 3.7 percent at $3.68. They bounced back from yesterday's 5.3 percent slide but are still down 20 percent so far this year. Chief financial officer Marc Rivers moved to calm the market, issuing a statement to the stock exchange saying there was nothing new behind the slump. About 395,000 units changed hands, almost twice their 90-day average of 200,000. Fonterra's farmer-owned shares rose 5.1 percent to $3.69 on a volume of 641,000, more than its 163,000 average.

"They stuck their hand up and said they're not doing as well as they could do, but they're addressing their debt situation, selling assets like Tip Top," said Greg Smith, head of research at Fat Prophets.

Companies offering reliable income remained in demand, and Smith said that will likely remain a key theme after the Reserve Bank of Australia cut its benchmark interest rate this week, putting pressure on New Zealand's central bank to follow suit. What's more, upcoming US employment data may force the Federal Reserve to cut, adding to the attraction of New Zealand's high-yield stocks.