New Zealand stocks joined a global selloff in equity markets and government bonds rallied amid concern more European nations will be dragged into the sovereign debt crisis, nudging the world back toward recession.
The NZX 50 Index shed 80.89 points to 3297.86, the lowest level in eight months. The decline in the local market is milder than on the major indexes in Europe and the US, where the Standard & Poor's 500 Index tumbled 4.8 per cent.
NZ Oil & Gas tumbled 5.8 per cent to 65 cents as the price of oil declined, leading decliners on the benchmark index. Exporters paced the slide with Rakon down 4.3 per cent to 89 cents and Fisher & Paykel Appliances falling 4.2 per cent to 57 cents. Telecom shed 2.6 per cent to $2.585 and Fletcher Building, the biggest company on the exchange, dropped 2 per cent to $7.85.
Fears of global recession were triggered when the European Central Bank dashed market expectations by saying it would not buy Italian and Spanish bonds in a bid to keep yields on 10-year securities below the sustainable level of 6 per cent.
So-called safe haven assets saw renewed buying, with reports that New York banks were charging investors to place deposits. Demand for government bond spiked, with yields on US two-year Treasuries at an all-time low 0.27 per cent.
