World markets fell on Tuesday following an inconclusive election result in Italy, amid concern that the reform agenda would be delayed.
The MIB index in Milan initially fell 4.7% and the FTSE 100 in London shed 1.5%. Share markets in Frankfurt and Paris fell more than 2%.
The yield on Italian government bonds rose sharply.
In New York, the Dow Jones Industrial Average fell 1.55% and Asian markets lost between 0.7% and 2.2%.
However, US investors later focussed on Federal Reserve chairman Ben Bernanke's testimony defending the fed's bond-buying programme.
Earlier, the Australian 200 Index closed down 52 points, or more than 1%, at 5,003. The NZX 50 index closed up 12 points to 4,239.
The New Zealand dollar was trading at 82.50 US cents at 7am on Wednesday after falling more than 1 cent in the last 24 hours. The kiwi was buying 80.79 Australian, 54.46 pence, 75.52 yen and 0.6323 euro. The Trade Weighted Index was at 75.53.
Brent crude oil was trading at $US114.07 per barrel and gold is trading at $US1611.56 per ounce.