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The New Zealand and Australian sharemarkets are feeling the brunt of a collapse on Wall Street overnight, when the Standard & Poor's 500 Index fell to its lowest point of the year.
Australian shares fell 2.6 per cent on opening as news of a default at a high-profile US mortgage lender fuelled more credit worries, driving financial firms lower.
The benchmark S&P/ASX 200 index dropped 140.3 points to 5,295.2 by 2310 GMT, after rising 1.1 per cent in the previous session.
National Australia Bank Ltd fell 4.8 per cent to A$27.10 ($31.84) and Commonwealth Bank of Australia Ltd lost 3.7 per cent to A$39.08.
Meanwhile, the New Zealand sharemarket has been heading south since opening this morning, following the lead of tumbling US equities.
By 12.30pm the benchmark NZSX-50 index was down 44 points, or 1.25 per cent, to 3559, having lost 15.6 points yesterday.
Among leading shares to drop early was top stock Telecom, which was down 3c to 390, following a 2c fall yesterday.
No 2 stock Fletcher Building was down 10c to 970, on top of a 31c fall yesterday, while Contact Energy was down 10c to 820 after a 5c gain yesterday.
Other falling stocks included Fisher & Paykel Appliances which was down 5c to 256, and F&P Healthcare, also down 5c to 292.
Freightways lost 7c early to 333, Infratil was down 2c to 233, Pumpkin Patch down 2c to 186 and Ryman Healthcare down 2c to 169.
Sky City shed 3c to 396, Steel & Tube lost 4c to 346, Tower was down 3c to 192 and The Warehouse down 2c to 598.
Among the few stocks to rise early Widespread Energy was up 1c to 15c, Allied Farmers added 4c to 149, and Briscoe Group was up 1c to 126.
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The fall in US stocks came after a series of fresh jolts to credit markets and lacklustre retail sales compounded worries the US economy is near recession, dragging benchmark indexes to their lowest closing levels of the year.
The Dow Jones industrial average sank 1.76 per cent to end at 12,039.25 while the Standard & Poor's 500 Index slid 2.20 per cent to finish at 1304.38. The Nasdaq Composite Index dropped 2.3 per cent to close at 2220.50.
- NZPA, REUTERS