Markets in Asia and the Pacific regained some ground on Tuesday amid ongoing concerns about a slowdown in global growth.
The markets took a hammering when they opened amid worries the United States is heading for a recession and concerns about European debt, but staged a big comeback.
New Zealand's benchmark index fell by 4% at one stage on Tuesday afternoon - its lowest level in a year - due to heavy losses on global equity markets.
By the close of trade, the NZX50 had regained some ground and was 87 points, or 2.75%, lower at 3097.
Weaker stock markets and higher-than expected inflation in China saw the New Zealand dollar fluctuate. On Tuesday evening, it had strengthened and was buying US81.8 cents, above its low of US79.7 cents in early afternoon trade.
The New Zealand market has lost just over 8% since heavy falls on Wall Street last Thursday sparked the slide in global stocks.
However, NZX managing director Mark Weldon is confident the market will fare relatively better than the US and Europe over the coming days and weeks.
Mr Weldon told Morning Report that New Zealand is better situated than the US and Europe in terms of relative performance.
He said there is likely to be continued uncertainty in the international markets until there starts to be more stability in northern hemisphere governments.
Asian markets recovered about half of their overnight losses by the close of trade on Tuesday.
Australian stocks staged a big recovery. After sinking more than 5.5% in morning trade, the benchmark S&P/ASX200 index closed up 48.7 points, or 1.2%, posting its first gain in six days.
In Japan, the Nikkei index closed down 1.7%, after tumbling more than 4% at one stage.
South Korea's Kospi was down 3.6%, while Hong Kong's Hang Seng was 2.8% lower.
Earlier, the Dow Jones dropped 5.6%, despite United States president Barack Obama trying to reassure investors.
The S&P 500 index was down 6.7% in New York on Monday - the worst drop since December 2008 - with every listed stock falling.
Indexes also fell heavily across Europe on Monday.
The BBC reports a recession in the US would hurt Asia's export-led economies.
Analysts say Asian economies may now have to have to revise their own economic projections as a result. On Monday, Singapore cut its growth forecast for this year to between 5% and 6%, down from 5% to 7%.