New Zealand shares fell on a subdued day of trading as fears over China's economy continue to cloud global markets.
The S&P/NZX 50 index dropped 0.9% to 6158.1, extending its decline this week.
China has now removed its artificial barrier for trading halts when stocks fall 7% - a halt that has happened twice this week - and allowed the biggest fall in the yuan currency in five months, adding to investor fears about the health of the economy. There is concern the Chinese sharemarket will now go into free fall, dropping quickly as investors rush to cash in while they can.
However shares across Asia were largely positive today. China's CSI300 index was up 2.8% in afternoon trade, while Japan's Nikkei 225 rose 0.1%.
US stocks extended their losses in the final hour of trading, with the Dow Jones Industrial average falling nearly 400 points by Thursday's close and investors are bracing themselves for another potential drop in Chinese markets today.
There is a rush to safe havens such as gold and US government bonds. European stocks are also down, and the New Zealand and Australian currencies are at recent lows.
Beijing has been trying to push down the value of its currency to boost exports, causing market turmoil and a sign the Chinese economy is doing worse that expected.
SHARES CONTINUE SLIDE
Shares on major exchanges fell for a sixth consecutive day on Thursday after China allowed its currency to weaken faster than before, sending commodity shares to their lowest levels for about a decade.
In the United States stocks sold off further, giving the Dow its worst start to a year since the 30-stock index was created in 1928, dragged down by another drop in Chinese equities.
Oil prices fell to 12-year lows and copper prices touched their lowest since 2009, weighing on energy and materials shares.
"People see the weakness in China and in the overall equity market and think there's going to be an impact on corporations here in the United States," said Robert Pavlik, chief market strategist at Boston Private Wealth in New York.
"When you have a market that begins a year with weakness, people are sort of suspect anyway. The economy isn't moving all that well, the outlook is modest at best, and they don't want to wait for the long term. China creates more uncertainty."
The Dow Jones industrial average closed down 392.41 points, or 2.32%, to 16,514.1, the S&P 500 had lost 47.17 points, or 2.37%, to 1,943.09, while the Nasdaq Composite had dropped 146.34 points, or 3.03%, to 4,689.43. The Dow has lost 5.2% since the end of 2015 in the worst first four trading days since the 30-stock index's creation.
In London, the commodity-heavy FTSE 100 hit a three-week low and closed down 119.30 points, or 2% at 5,954.08 to wipe £33 billion off its market capitalisation.
Brent crude cut a loss of more than 6% to trade down 0.4%, with traders citing short-covering. US crude, down as much as 5.5% earlier, was down 0.8%.
The 7% drop in Chinese markets overnight had triggered a flight to safety, but the circuit breaker reversal helped cut losses in other risk assets, including the US dollar.
Investors, however, remain concerned that China is struggling to keep control of the yuan. The People's Bank of China (PBOC) set the yuan midpoint rate at 6.5646 per dollar, a 0.5% decline that was the biggest between daily fixings since August. It was the eighth consecutive day the PBOC had set a lower guidance rate.
The pan-European FTSEurofirst 300 index and the euro zone's blue-chip Euro STOXX 50 index were down 2.4% and 1.8% respectively, having fallen more than 3% earlier in the session. A gauge of major stock markets globally fell 1.4.%.
STRONG EURO
Investors fear China's economy is even weaker than had been imagined, with Beijing, in a bid to help exporters, allowing the yuan's depreciation to accelerate.
The US dollar trimmed losses against a basket of currencies after the Chinese stock exchanges announced the removal of the circuit breaker. The dollar index was however down 0.4% on the day.
The euro gained 0.7% to $1.0849. The yen rose 0.4% to 118 per dollar after hitting 117.30, its strongest since late August 2015.
Global oil benchmark Brent gained 0.5% at $US34.40 a barrel and WTI gained less than 0.1% to $US33.99 a barrel.
- additional reporting from NZ Herald and Reuters
