Europe's widening debt crisis steered global sharemarkets to another day of losses, with France's ability to retain its AAA credit rating under scrutiny.
Following a rebound in US shares and then Asian bourses clawing back earlier massive losses, European markets tumbled yesterday to a two-year low, triggered by French banking shares, which left France's CAC 40 index down 5.5%, Germany's DAX 30 down 5.1% and Britain's FTSE 100 down 3.1%.
While the NZX SE50 closed up 3% on Wednesday, on reopening yesterday it was trading down about 1%. It ended the day up 24.9 points at 3209. The Australian ASX began with heavy losses in morning trade yesterday with the ASX200 down 1.6% and the All Ordinaries down 2%.
The New Zealand dollar declined almost US1c to trade down around $US82.1c yesterday as investors left riskier currencies. At 5pm, it was trading at US82.23c.
Shares in the US, which had rallied on Tuesday, lost most of those gains, with the Dow Jones, S&P500 and Nasdaq indexes all closing more than 4% down.
Forsyth Barr broker Peter Young said that aside from Iceland's stock exchange, the national benchmark indexes fell in all of 18 western European markets because of speculation the region's debt crisis was spreading.
"The United Kingdom stocks were down, led by a sell-off in banks as the cost of insuring French debt rose to a record. This is renewing concerns that Europe's sovereign debt crisis may spread to its larger economies," Mr Young said.
Craigs Investment Partners broker Chris Timms said the FTSE 100 fell 3.1% overall. Royal Bank of Scotland shares plunged 7.3%, while HSBC declined 5.3%.
In France, bank shares fell 6.7%, with Societe Generale down 15% and BNP Paribas down 9.5%. Shares in steel and metal products distributor Kloeckner plunged 26% after its earnings missed projections.
"The US stocks finished near session lows in choppy trading, with the Dow and S&P500 wiping out all of the previous sessions gains, led [down] by financial stocks," Mr Timms said.
Japan's Nikkei closed up 1.1%, Korea's Kospi rose 0.27% and Hong Kong's Hang Seng index was up 2.3%.
