The New Zealand sharemarket fell to a five-year low on Tuesday as investors took their lead from Wall Street before trimming those losses slightly to close down 50 points, or 2%, to 2487 on turnover of $83 million.
The market is now below 2500 points for the first time since January 2004.
Telecom closed up 1 cent to $2.38, Contact Energy lost 25c to $5.80, Fletcher Building lost 5c to $5.35 and Pumpkin Patch gained 12c to 95c.
Companies with high debt levels - such as Fisher & Paykel Appliances and resins maker Nuplex - stayed under pressure. Brokers say fears that these companies may have to issue new shares to bolster fragile balance sheets weighed on the market towards the end of the day.
Wall Street indexes were down by more than 3.4% on Monday to their lowest levels in nearly 12 years.
The New Zealand dollar was buying 50.99 US cents, 79.05 Australian cents, 35.02 pence, 48.52 yen and 0.4007 euro. The Trade Weighted Index was 52.14.
Australian market down
Across the Tasman, the Australian sharemarket closed weaker, dragged lower by the big miners and most of the main banks, after Wall Street fell so heavily.
The S&P/ASX200 index was down 19.6 points, or 0.58%, to 3331.6, while the All Ordinaries index lost 19.1 points, or 0.58%, to 3285.
On the Sydney Futures Exchange, the March share price index futures contract was 46 points weaker at 3315 on a volume of 24,620 contracts.
Japan market also falls
Sharemarkets worldwide are plunging again, with share prices in Japan falling to nearly 26-year lows on Tuesday in the aftermath of heavy losses on Wall Street.
The Nikkei was down 1.5% at the close of business, while the Hang Seng index in Hong Kong fell 3.5%.
Japan's finance minister has outlined plans should prices fall too far.
Investors appear to be losing confidence in United States President Barack Obama's ability to tackle the deepening global recession.
Sam Stovel of credit rating agency Standard & Poor's expressed worry that bank losses would keep escalating as the recession sends more borrowers into default.
Meanwhile, Japanese Prime Minister Taro Aso has arrived in Washington to become the first foreign leader to visit Mr Obama at the White House. They are expected to discuss the global economic crisis.