The prospects for a new Greek government are looking up, as is the latest US jobs data, helping stocks on both sides of the Atlantic advance. 

New Zealand shares fell, led by Cavalier, after the carpet maker said charges to restructure its carpets business may wipe out profits this year. 

Stocks on Wall Street and in Europe declined amid concern about US growth after a larger-than-expected number of Americans filed for unemployment benefits, plus drop in existing home sales and disappointing factory activity.

 Wall Street dropped on disappointment with Friday's non-farm payrolls report and investors are looking to the start of the first-quarter earnings season for fresh clues.

The Federal Reserve will extend troubled global insurer AIG $US85 billion in exchange for a nearly 80 percent stake.

The historic move is hoped to avoid the biggest corporate bankruptcy ever and follows a government bailout of mortgage lenders Freddie Mac and Fannie Mae just over a week ago.

The rescue plan is the latest development in a week of high drama on the world financial scene that included a deal to buy up profitable operations of bankrupt Lehman Bros, and central banks injecting liquidity into strained money markets.

In other developments: