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SYDNEY - The Australian share market dropped almost two per cent today amid more turmoil in US financial markets after Wall Street dropped to its lowest close since the September 2001 terrorist attacks.
A late rally among major banks and gains in resources stocks kept the local damage
from the fall out from the Lehman Brothers collapse to a minimum .
At the close today, the benchmark S&P/ASX200 index was down 66.9 points, or 1.39 per cent at 4750.8, while the broader All Ordinaries lost 75.2 points, or 1.54 per cent to 4799.8.
At 1615 AEST on the Sydney Futures Exchange, the September share price index contract was 58 points lower at 4769, on a volume of 122,131 contracts.
CMC Markets senior dealer James Foulsham said the losses were not as bad as expected following a negative lead on Wall Street but the combined losses of the past two days were significant.
"The pain has been spread over two days in the Aussie market, we copped a pretty big hit yesterday because we are a day ahead and the Lehman's announcement had already come out," he said.
"It's not quite as bad as people expected (today), but if you look at it over two days it's pretty large money."
Yesterday the S&P/ASX200 index fell 86.1 points, or 1.76 per cent, while the All Ordinaries lost 82.1 points, or 1.66 per cent.
There may be a slight recovery in US stocks tonight but more pain is set to be felt, Mr Foulsham said.
"We might see a slight short-term bounce, but there's still a lot of people who think we're only scratching the surface at this stage."
The local market was weaker from the opening after the Dow Jones Industrial Average tumbled 4.42 per cent to 10,917.51, its largest point loss since reopening after the September 2001 terrorist attacks.
Locally, most banks said they had "modest" exposure to the Lehman Brothers group of companies.
Commonwealth Bank fell 28 cents to $41.70, NAB lost 92 cents, or 4.03 per cent, to $21.90, while ANZ dropped 51 cents, or 3.02 per cent, to $16.36.
Westpac gained 11 cents, or 0.48 per cent to $23.26 and its takeover target St George Bank shed 24 cents, or 0.79 per cent to $30.10.
Macquarie Group fell $2.66, or 6.74 per cent, to $36.80, while Babcock and Brown plunged 53 cents, or 33.54 per cent, to $1.05.
The big miners were stronger, with BHP Billiton gaining 35 cents to $36.40 and Rio Tinto adding 42 cents to $106.85.
Rio announced it has resumed full operations at its Cape Lambert port in Western Australia after a rail car dumper sustained damage.
The energy sector was markedly weaker, with Oil Search shedding 32 cents, or 5.38 per cent, to $5.63, Woodside giving up $1.64, or 3.15 per cent to $50.36, and Santos losing $1.06 cents, or 5.64 per cent, to $17.74.
At 1625 AEST the spot price of gold was trading at US$773.80 an ounce, down US$3.60 on yesterday's local close of US$777.40.
The gold miners were mixed, with Newcrest Mining down 35 cents, or 1.66 per cent, to $21.45, Lihir dropping eight cents, or 3.9 per cent, to $1.97 and Newmont slipping 12 cents, or 2.42 per cent to $4.83.
In company news, Seven Network chairman Kerry Stokes and his deputy Peter Gammell have been invited to join the board of West Australian Newspapers Holdings Ltd, chairman Peter Mansell said today.
West Australian Newspapers was 30 cents lower, or 3.43 per cent, at $8.45.
Seven was down 17 cents, or 2.23 per cent, to $7.45.
In other media stocks, Fairfax lost six cents $2.84, Consolidated Media Holdings fell 11 cents to $2.99, News Corp rose 35 cents to $17.23 and its non-voting shares added 45 cents to $16.99.
Elsewhere, Argonaut Resources NL said up to $2.6 million of its funds may have been fraudulently misappropriated.
Argonaut shares fell 2.5 cents, or 18.52 per cent, to 11 cents.
Gaming firm Tabcorp Holdings Ltd today launched its Northern Territory-based telephone and online bookmaking business, Luxbet.com, which will start operations on October 1.
Tabcorp shares fell six cents, or 0.73 per cent, to $8.11.
The retailers were mixed, with Woolworths gaining 14 cents to $28.27, Wesfarmers losing 25 cents to $29.20, David Jones finding 11 cents to $4.02, and Harvey Norman falling 14 cents, or 3.93 per cent, to $3.42.
Telstra was the most traded stock on the market, with 56.86 million shares changing hands, collectively worth $237.38 million.
The telco added dropped eight cents to close at $4.17.
Optus parent Singapore Telecommunications improved seven cents, or 2.54 per cent, to $2.83.
Market turnover reached 1.78 billion, worth $7.02 billion, with 233 stocks moving up, 944 moving down and 243 unchanged.
- AAP