New Zealand shares have fallen sharply as fears about rising US interest rates sparked a return to market volatility following a long period of calm.

The S&P/NZX 50 was down 2.5 per cent at 7287.31 at 2pm, following on from a Wall Street rout on Friday that saw the S&P 500 notch up a 2.4 per cent loss for the week.

Today's sell-off on the local market is bigger than slump on June 24, when Britain voted to leave the European Union, sending financial markets into chaos.

The NZX 50 closed down 2.3 per cent on the day of the Brexit vote.

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The return of volatility - sparked by concerns that the US Federal Reserve may begin hiking interest rates sooner than expected - ended the calm that had enveloped markets since late June, following the recovery from the Brexit shock.

Stephen Bennie, of Auckland fund manager Castle Point, said stocks had been trading in a "remarkably tight range" for some time.

"Ever since they recovered from Brexit they had been in this flat-line period," he said.

"When you get that type of situation, the next move is often quite impulsive ... And it went sharply lower."

The Chicago Board Options Exchange Volatility Index, known as Wall Street's "fear gauge", rose above 17 for the first time in 50 trading sessions on Friday, according to Bloomberg.

Commodity-linked currencies, including the New Zealand dollar, also fell.

The kiwi was trading at 73.14c at 8am this morning, down from US73.97c last week.

Wall Street's rout followed comments from Boston Federal Reserve President Eric Rosengren that the US central bank faced risks if it waited too long to raise rates.

A day earlier, European Central Bank President Mario Draghi downplayed the need for additional stimulus to boost growth.

Low and negative interest rates and bond yields have been pushing investors toward stocks and fuelling an equity bull-run that is now well into its seventh year in New Zealand and the US.

Bennie said investors were having to "get their heads around" how markets would react to rising interest rates.

"Also in the mix is the US election and that's starting to get a lot tighter."