KEY POINTS:
The New Zealand sharemarket succumbed to continued nervousness about global credit markets , with the top-50 index erasing all the gains made this year.
The benchmark NZSX-50 index has fallen more than 7 per cent in three weeks, closing 61.2 points lower or 1.5 per cent to 4004.45 on a moderate $125 million turnover.
New Zealand was not as volatile as Australia, which was down 2.1 per cent in late trading, but was in line with a 1.5 per cent fall on Wall St's Dow Jones last night.
Sellers were thought to be local profit-takers, and offshore investors shaken by the plummeting New Zealand currency and by fears about the extent of the US subprime market 's woes.
Macquarie Equities head of broking John Owen said the situation today was "grim".
"People aren't really buying because I don't think people know where the bottom might be, but equally they're not necessarily selling."
"The problem with it now, it's gone on longer than everyone thought," Mr Owen said.
The nervousness "hasn't been shaken out yet" but with market sentiment against equities, a lot of stocks were now good buying, he said.
Selling was across the board. Portfolio staple Telecom traded strongly, falling 2c to 427, but Fisher & Paykel Appliances was largely unloved, despite the fall in the New Zealand dollar.
Shares in FPA dropped 6c to 351 as it announced the shifting of another factory to Thailand , saving $6 million a year.
Fisher & Paykel Healthcare was better traded, down a cent to 342 on $4 million worth of shares.
Fletcher Building fell 41c to 1157 although Mr Owen thought it was over-sold. Today Australian building materials firm Boral reported a 17 per cent fall in annual net profit due to a struggling housing market in New South Wales.
Other moves included Auckland Airport down 4c to 306, Air NZ down 6c to 240, Contact down 13c to 890, Sky City down 10c to 440, NZX down 35c to 955, and TrustPower down 15c to 810.
Vector closed flat after posting a 126 per cent rise in June year net profit to $101.7 million.
The Warehouse fell 30c to 583, which Mr Owen attributed to softening retail data and rising import costs.
Among the smaller stocks, Richina Pacific gained 3c or 6 per cent to 51c, Tenon rose 6c or 2 per cent to 228, Smiths City fell 7c or 11 per cent to 56, and Abano dropped 20c to 340.
Rural-based stocks fell heavily, including PGC down 26c to 410, PGG Wrightson down 10c to 175 and Allied Farmers, down 10c to 175.
- NZPA