NZ sharemarket follows world equities down

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The New Zealand sharemarket followed world markets lower in early trading, as sovereign debt fears on both sides of the Atlantic and China's monetary tightening hurt the outlook for global economic growth.

Around 10.20am the benchmark NZX-50 index was down 15.14 points to 3450.03, having gained 12.5 points yesterday.

Shares in OceanaGold Corp fell 14c to 370, Contact Energy dropped 6c to 576, NZ Refining Co dropped 5c to 455, Fletcher Building lost 4c to 910, and Nuplex was down 3c to 302.

Telecom was unchanged on 206.5 after the High Court imposed a record $12 million penalty on the company for a breach of the Commerce Act.

A threat by Standard & Poor's to cut its AAA rating of US government debt and renewed worries about Europe's debt crisis spurred a sell-off in major world stock markets.

The weakness started in European markets on fears that Greece will have to restructure its debt possibly as early as the summer.

Gold prices rallied to record highs of nearly $US1500 an ounce while other commodities tumbled as investors fled to safe-haven assets.

In the United States, stocks fell more than 1 percent, but ended off their lows as some analysts said the sell-off was overdone, though the decline was still the largest in a month.

The Dow Jones industrial average slid 1.1 per cent to 12,201.59, the Standard & Poor's 500 Index declined 1.1 per cent to 1305.14, and the Nasdaq Composite Index dropped 1.1 per cent to 2735.38.

- NZPA