Credit rating agency Standard & Poor's downgraded Greece's rating to junk and also downgraded Portugal, fueling fear about euro-zone economic stability.
A grilling of Goldman Sachs, in Washington, heightened the possibility of financial reform in the United States.
Craigs Investment Partners broker Chris Timms, of Dunedin, said the fall in New Zealand shares was broad brush with no sector affected more than any other.
"We are taking our lead from offshore.''
In the first 20min of trading, more than $25 million of shares were crossed. Trading of $100 million was regarded as a "reasonable day'' on the NZX-50, he said.
About $4 million of the trades were on Telecom alone.
Britain's top share index dropped 2.6%, the biggest fall in more than five months.
The CBOE Vix volatility index, Wall Street's barometer of investor fear, jumped about 31%, its biggest one-day move since October 2008.
