Key Points:

The sharemarket continued its downward trajectory, hitting a fresh year low after a sharp drop on Wall St.

The NZSX-50 index fell 1.2 per cent or 47.97 points to 3824.20, and falls outnumbered rises 92 to 15 on total turnover of $89 million.

The index has fallen 5 per cent since the start of the year, further than Asian stocks, which have dropped 3.4 per cent this year as measured by the MSCI regional index.

"It's been a pretty ordinary start to the year so far," Campbell Stuart, managing director of UBS, said.

"I think participation from retail and institutional investors is reasonably modest and things are just drifting into a hole."

Today stocks fell across the board. Telecom ended flat at 420 on $23.5 million worth of shares, Contact dropped 22c to 805, Sky City fell 11c to 409 and Fisher & Paykel Appliances fell 8c to 310.

Fletcher Building slipped 16c to 1057, although this was not a strong reaction to data showing slowing building consents and cooling house price growth.

Turnover was high in Sky City which lost 11c to 409 on $16.2 million worth of shares, and Air NZ which added 3c to 184 on volume worth $8.1 million.

Among the handful of other rises, Ebos gained 5c to 500 and the Warehouse jumped 10c to 570 on low volume.

Mid-cap movers included Mainfreight down 19c to 595, Hellaby down 10c to 220, and Trustpower down 24c to 790. Abano lost a cent to 514 in thin trade, below the $5.20c takeover offer from Crescent Capital.

"I think people are just following the US and there's a few bank results to come out and we will wait to see if there are any more writedowns or anything," Mr Stuart said.

"I just think people are holding their breath at the moment."

In Australia , shares edged slightly higher, up 0.1 per cent, having recovered from an early fall of as much as 1.3 per cent after top miners BHP Billiton Ltd and Rio Tinto Ltd turned positive.

It was in contrast with Wall St, which slumped on Friday following warnings including from American Express Co about slowing US consumer spending, a bad omen for Asian exporters.

The Dow Jones industrial average ended down 246.79 points, or 1.92 per cent, at 12,606.30.

The Standard & Poor's 500 index fell 19.31 points, or 1.36 per cent, to 1401.02. The Nasdaq composite index dropped 48.58 points, or 1.95 per cent, to 2439.94.

Adding to the nervousness, the New York Times reported that Merrill Lynch was expected to suffer US$15 billion ($19.42b) in losses stemming from soured mortgage investments.

- NZPA