The New Zealand sharemarket followed world markets into a funk in early trading, but heavyweight Telecom bucked the trend after reporting a better than expected 1.6 percent rise in full year adjusted net earnings.
Around 10.15am the benchmark NZX-50 index was down 48.02 points, or 1.5 percent, to 3238.2, having ended down 3.9 points yesterday.
Telecom was a lonely figure in the gains column, up 4c early to 264.5, but most other stocks lost value, with Fletcher Building dropping 23c to 772, Mainfreight down 25c to 980, Port of Tauranga down 10c to 928, Contact Energy down 9c to 493, Fisher & Paykel Healthcare down 7c to 227, Freightways down 6c to 328, Nuplex down 6c to 239, Sky City down 6c to 239, and Kathmandu down 6c to 189.
A rout in global equities was sparked by renewed jitters over Europe's debt crisis and a raft of weak US economic data, as skittish investors raced to the safety of gold and US government bonds.
The FTSEurofirst 300 index of leading European shares fell 4.8 percent to close at 925.19 points, its biggest one-day percentage drop since March 2009.
"The market is beginning to price in a recession," said Michael Hewson, market analyst at CMC Markets in London.
"Until we get some clear idea of how policy-makers are going to deal with euro-zone sovereign debt problems, it's not getting to get any better."
US stocks plummeted in parallel with bank shares after The Wall Street Journal reported that regulators were intensifying their review of the US units of European banks.
The sell-off "is rooted in the European banking system," said Jack de Gan, chief investment officer at Harbor Advisory Corp.
US stocks pared losses at the market's close, with the Dow Jones industrial average down 3.7 percent at 10,990.58, the Standard & Poor's 500 Index fell 4.5 percent to end at 1140.65, and the Nasdaq Composite Index slid 5.2 percent to finish at 2380.43.
