NZ shares drop 1.8pc, joining global rout

File photo / Paul Estcourt

New Zealand shares fell 1.8 per cent, joining a global slide in equities, commodities and growth-linked currencies, as evidence mounted that worldwide economic growth is faltering.

The NZX 50 Index dropped 60.65 points to 3251.62 at the open. There were 37 decliners and no gainers on the index.

OceanaGold sank 6.8 per cent to $3.04 as the price of gold declined. Fletcher Building, the biggest company on the exchange, fell 2.7 per cent to $7.25.

Fisher & Paykel Appliance tumbled 11 per cent to 40 cents and Steel & Tube Holdings fell 7.9 per cent to $2.21.

On Wall Street, the Dow Jones Industrial Average shed 3.5 per cent and Germany's DAX 30 fell almost 5 per cent. Investor confidence was dented by weaker-than-expected Chinese manufacturing data yesterday, which stoked fears the fastest-growing major economy won't have enough momentum to underpin the global economy.

Softer European data and still-high US jobless benefit claims came amid signs the US Congress is heading for another impasse over budget measures and a bleak assessment of the US economy from the Federal Reserve.

The so-called "safe haven" assets saw massive demand on world markets overnight with yields on US 10-year Treasury bills falling to 1.7 per cent, its lowest level since 1945, and the Dollar Index gaining to 78.46, its highest level since mid-February.

Gold fell to US$1,727.34 an ounce from US$1,770.74 yesterday, as the resurgent greenback eroded its value.