Key Points:

The Federal Reserve's drastic move to slash the key US interest rate by 75 basis points overnight helped snap a record 14-session losing streak on the New Zealand sharemarket today, but only just.

Brokers said today's 0.2 per cent rise in the benchmark index was unconvincing. Sellers dumped stocks again in a late flurry.

Similarly, across the Tasman, Australia's index, up 6-1/2 per cent in the morning following yesterday's 7 per cent rout, had pared that back to a 3 per cent gain as the local market closed.

"I don't think anybody would be suggesting we are out of the woods," said Forsyth Barr's head of retail broking, Shane Edmonds. "It was relatively unconvincing. While markets have recovered somewhat... some of it is just a recovery of the overdoing it of those markets.

"The issue that investors will be watching offshore is whether the rate cut was enough to dispel concerns. While it will go some way to helping, investors will still be watching to see what other flow-on effects are from the major corporates in all parts of the world."

The benchmark top-50 share index, which had tumbled 10 per cent this year until yesterday and 16 per cent in three months, rose in relief by 8.16 points to 3615.30. However, that was 34 points off the session high.

"We started with a hiss and a roar but slowly the sellers came out of the woodwork," said ASB Securities broker Andrew Kelleher.

The Fed's emergency decision to cut the interbank lending rate by three quarters of a percentage point was the biggest in over 23 years. Until that point, sharemarkets had been in freefall this year on concern about recession, precipitated by bank losses from the subprime mortgage and credit crisis.

Nearly US$1 trillion ($1.32 trillion) was lopped off investor wealth worldwide yesterday alone.

"While people realise that (the rate cut) alone is not going to get us out of the woods, at least it was an attempt by the Fed to try to get a little more in front of the negativity as opposed to being reactionary," said Michael James, senior trader at regional investment bank Wedbush Morgan in Los Angeles.

The Dow Jones industrial average clawed back from a 465 point deficit to end 128 points, or 1.06 per cent, down at 11,971.

The pan-European FTSEurofirst 300 index ended 1.9 per cent higher, snapping a five-day losing run.

While Germany's DAX ended 0.3 per cent lower, Britain's FTSE 100 index rose 2.9 per cent, and France's CAC 40 added 2.1 per cent.

Finance Minister Michael Cullen tried to soothe investor fears by saying the economy was in a strong position.

"Don't forget we have been enjoying the longest period of economic expansion in more than a generation," he said.

Dr Cullen said Treasury officials continued to constantly monitor developments as they assessed potential implications for New Zealand's economy.

Reserve Bank Governor Alan Bollard is due to conduct his regular six weekly review of interest rates tomorrow but no one expects him to follow the Fed's lead. Instead, he is expected to only moderate his hardline stance against inflation but still threaten further rate rises.

Ian Waddell of Waddell Johnston McCarthy said he believed share selling had been overdone but still described today's action as "a relief rally".

"It's really got to consolidate and build. The most important thing will be a good reporting season. That's going to start in the next two weeks."

Market leader Telecom closed unchanged on 399, No 2 stock Fletcher Building closed well off its 1015 high, also unchanged on 995 while No 3, Contact Energy, which has been particularly hard hit this year, ended up 7c on 720.

The Warehouse gained 21c to 552, as did TrustPower, to 720 while Freightways rose 23c to 340.

However, gains were far from universal with Fisher & Paykel Appliances down 14c to 286, Fisher & Paykel Healthcare, 13c to 307, NZOG 3c to 103, ANZ Bank 60c to 2900 and Nuplex down 10c to 570. Some of these stocks are expected to be hit hard by the downturn in US markets.

ASB's Mr Kelleher said investors would take some confidence from the Fed's move but they can expect more volatility ahead.