Watling, whose double century in the first test was the foundation of New Zealand's win by an innings and 65 runs, shared an unbroken partnership of 57 with debutant Daryl Mitchell to see New Zealand to lunch without further loss.
At the break Watling was 29, Mitchell on 26 and New Zealand was 248-5 after 90 overs. England made a strong start Saturday as New Zealand resumed at 173-3 after dominating the first day. Broad bowled Latham in only the third over of the morning.
It's part of Latham's technique that he leaves very close to his off stump. But he made a major error in judgement in playing no shot at a ball from Broad, bowling around the wicket, which was angled in and always hitting. The ball took the top of his off stump, ending his innings of slightly more than four hours and 172 balls.
Nicholls followed five overs later. He was drawn into a hook shot to a bouncer from Sam Curran, didn't fully control the shot and picked out Broad on the fine leg boundary. Once again England put down a vital catch and fared poorly with the Decision Review System.
Part-time wicketkeeper Ollie Pope, standing in for the injured Jos Buttler, dropped Watling from the bowling of Curran when he was only 1. Watling was dropped by Ben Stokes at slip when he was 31 in the first test and went on to make 205 in New Zealand's 615-9 declared.
England also wasted a review in challenging an lbw decision which was turned down when Watling was on seven. The replay showed an inside edge. On the first day Friday, England came out on the wrong side of three DRS rulings against Latham and Ross Taylor.
Mitchell looked solid on debut. His 26 runs included a straight six off part-time leg-spinner Joe Denly which flew over the side screen and landed 110 meters from where it was struck. Mitchell is the son of former All Blacks head coach and current England assistant rugby coach John Mitchell.
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