Kiwi slides, NZX falls as world markets tumble

The New Zealand dollar slid to one-month lows against the greenback and yen as world sharemarkets tumbled.

By 8am the kiwi was buying US55.02c, having dropped to around US54.85c earlier in the morning, from US56.76c at 5pm yesterday. The NZ dollar has fallen from around US59.30c in the past week.

At 1pm on the New Zealand sharemarket, the NZX-50 index was down 1.44 per cent at 2660.

Falls outnumbered gains. Leading stock Telecom was down 5c early to 245, Fletcher Building dropped 16c to 639, and Contact Energy slipped 4c to 574.

Meanwhile, the US dollar rallied broadly as renewed bank sector worries battered Wall Street and increased the greenback's appeal as a safe store of value.

US stocks fell more than 3 per cent, following European equities. Bank of America plunged 23 per cent despite a profit gain after it reported a big increase in reserves for bad loans.

ANZ bank said the NZ dollar was hit hard as risk appetites retreated and commodities fell sharply.

Previously the kiwi had been caught up in growing optimism that global financials were on the mend following better than expected results from some of the major United States banks.

Investors had been willing to overlook still dire economic data, ANZ said.

But a bit of reality seemed to have sunk in overnight, following the Bank of America results.

The NZ dollar also fell to 0.4258 euro at 8am from 0.4360 at 5pm, but edged up against the Australian dollar to be at A78.96c at the local open from A78.85c. The trade weighted index was 55.36 at 8am from 56.67 at 5pm.

- NZPA