The sharemarket turned an early 4 percent loss into a 1 percent decline today, avoiding panic as markets around it tumbled by up to 7 percent following an overnight slump on European sharemarkets.
New Zealand's benchmark Top-50 Index closed down 39.8 points at a 15-month low of 3607.1, having been down nearly 150 points earlier.
Turnover totalled a moderate $110.3 million, with falls outnumbering rises 108 to 27, as the index extended losses to a record 14th consecutive session.
Stocks around the world went into freefall overnight, with investors bailing into safe-haven bonds and currencies amid fear a deteriorating US economy will drag others down with it.
Australia's benchmark index was down 6 percent today, while other regional markets fell about 5 percent, topped by an 8 percent decline in Hong Kong.
All eyes will be on Wall Street, which was closed for a holiday yesterday.
New Zealand's market began its decline last year, earlier than many others as overseas investors began selling, said Macquarie Equities NZ investment director Arthur Lim.
"I think there's been a fairly aggressive selldown of some of the New Zealand stocks, to a level where I think perceived value is emerging."
Institutions appeared to dominate the buying today, with volume in Contact Energy the highest since mid-December, he said.
It was inevitable, however, that New Zealand shares would feel the effects of further world market declines.
Brokers were looking for signs of capitulation where investors, who did not want to be in the market or could not stand the volatility, sold at whatever prices they could get.
"That normally marks the turnaround in the market, and I don't think we're there yet," Mr Lim said.
It tended to be marked by bigger volume and aggressive selling of good as well as bad stocks, signs of panic that emerged in Europe overnight.
Among the few stocks to rise today were Fisher & Paykel Healthcare, up 5c at 320, F&P Appliances, up 7c at 300, Auckland Airport, up a cent at 255, Sky TV, up 3c at 535, and Kiwi Income Property Trust, up 2c at 129.
Top stocks fell, with Telecom down 10c at a 17-month low of 399, Fletcher Building down 5c at a 13-month low of 995, and Contact Energy down 15c at a 15-month low of 713.
The New Zealand Dollar's fall to a three-month low of US74.5c would also help some stocks, particularly exporters.
Sanford was up 5c at 385, Methven rose 5c to 180, carpetmaker Cavalier rose 20c to 270, and Skellerup gained 2c to 82.
PGG Wrightson was down 10c at 214, Mainfreight lost 8c to 564, Freightways fell 13c to 317, Hallenstein Glasson lost 14c to 344, and The Warehouse shed 19c to 531.
NZX lost 16c to 784. Infratil, which had been among the hardest hit with an earlier 7 percent fall, closed down 3c, or 1 percent, at 252.
Dual-listed stocks were negative, with ANZ down 95c at 2960, Westpac off 120 at 2880, APN News down 18c at 592, and AMP down 34c at 950.
The pan-European FTSEurofirst 300 closed down 5.8 percent, taking its 2008 year-to-date losses to more than 15 percent.
While US markets had been closed for the Martin Luther King Day holiday, stock index futures were down sharply, suggesting investors were not putting much hope on Wall Street leading a rebound when it returned to business.