NZ shares pull out of China nose-dive

Market watchers are expecting the NZX to be down today, after a rocky ride on world sharemarkets overnight.

New Zealand share prices pulled out of a China-inspired nosedive to close up slightly, assisted by a degree of stability returning to the Australian market, and as bargain hunters moved in to take advantage of improved value throughout the region.

At close the local market, which earlier had fallen by 2.4 per cent on the S&P/NZX50 Index, had levelled out, to be up 6 points down at 5,613.

Australia's All Ordinaries Index, after a sharp fall on Monday, gained 2.2 per cent, Hong Kong's Hang Seng Index was up 2.5 per cent, Taiwan's TAIEX index was up 2.3 per cent and Japan's Nikkei 225 was level.

The Shanghai Composite Index, which dropped by 8.5 per cent on Monday, was still weak but off its session lows, to be at down 4.5 per cent.

The New Zealand share market had opened sharply weaker for the second day in a row as on the back of investor anxiety about China's economic prospects.

In the United States, the Dow Jones Industrial Average finished nearly 600 points down to its lowest closing point since February 2014. The index had dropped by just over 1,000 points in the first few minutes of trade.

Fund managers said Monday's fall on local and international markets was a much needed correction.

"We have had a very strong run in the capital markets in the last three years and it's not a surprise to see it falling back, but we are going to see more volatility," Shane Solly, portfolio manager and research analyst at Harbour Asset Management said.

Fund managers said that while the local market could expect to see more turbulence arising from volatility in offshore markets.

"We have had a very strong run in the capital markets in the last three years and it's not a surprise to to see it falling back," Mark Lister at Craigs Investment Partners said.