Australian stocks: Market plunges over 3 per cent

MELBOURNE - The Australian sharemarket has plunged more than three per cent over concerns about the stability of the US economy, with falls across all sectors.

At 1615 AEST the the benchmark S&P/ASX200 index had dropped 132.7 points, or 3.44 per cent, at 3723.4, while the broader All Ordinaries index declined 131.7 points, or 3.43 per cent, to 3710.8.

On the Sydney Futures Exchange at 1615 AEST, the June share price index contract was 106 points lower at 3734 on volume of 26,969 contracts.

"There is just no good news to come from today, it is just as simple as that," said client adviser with Macquarie Equities, David Halliday.

"The falls that occurred last night on Wall Street predicated a huge wave of selling here. The market started down, and has just continued to trade lower," he said.

Overnight America's Dow Jones Industrial Average fell 184.22 points, or 2.18 per cent, to 8248.89.

"The reality is that this has probably caught a lot of people by surprise," Mr Halliday said.

"People were just starting to get a bit confident and put their toe back in the water, but to some extent people ignored that the economic situation globally was still fragile, at best," he said.

Rio Tinto shares were hit hard amid speculation the resources giant may alter or scrap its planned US$19.5 billion (A$25.89 billion) deal with Chinese company Chinalco.

At 1615 AEST shares in Rio had dropped 11.72 per cent, or $7.65, to $57.60.

BHP Billiton shares ended down $2.13 at $32.30, while Fortescue Metals Group ended down 10.88 per cent, or 32 cents, to $2.62.

The spot price of gold was US$924.55 per fine ounce, down US$1.60 on Wednesday's local close of US$926.15.

Newcrest ended Thursday at $29.53 off 62 cents, Newmont finished four cents down at $5.76 and Lihir Gold fell eight cents at $3.02.

"The mining sector is one of the most cyclical sectors and whenever the economic news turns bad, inevitably the commodity price complex depreciates and that flows directly through to lower prices," Mr Halliday said.

The price of oil also fell overnight and energy stocks were down.

Woodside Petroleum was $1.67 weaker at $43.15 and Santos fell 6.84 per cent, or 99 cents, to $13.48.

Origin Energy was off 51 cents at $15.50.

Among the major banks, Commonwealth Bank had the biggest percentage fall, down 3.46 per cent, or $1.27, to $35.47, while National Australia Bank shares lost 54 cents to $21.18, Westpac shares ended 40 cents lower at $20.20 and ANZ lost 34 cents to $15.37.

Macquarie Group shares dropped $1.24 to $33.51.

Engineering contractor Macmahon Holdings Ltd said on Thursday that it hopes to raise $60 million from a share offer and use the proceeds to pay down debt and reduce gearing.

Macmahon shares remain in a trading halt, haivng last traded at 40 cents.

Leighton Holdings Ltd, which holds 17.4 per cent of Macmahon and will sub-underwrite part of the deal, fell $1.83 to $22.52.

Leighton had also reported a 41 per cent drop in nine-month profit and booked further writedowns in the third quarter of its financial year.

Shares in Optus owner Singapore Telecommunications were steady at $2.48.

Singapore Telecommunications reported a dip in full year net profit and Optus chief executive Paul O'Sullivan said the telco attracted more shoppers as a result of government stimulus measures.

Developer Lend Lease was down 15 cents to $6.90 despite saying it would continue to develop the athletes village for the London 2010 Olympic Games.

Fairfax Media ended the day off 5.5 cents at $1.02 after ratings agency Standard & Poor's downgraded its credit rating, while rival News Corp was down 45 cents to $13.34 and its non-voting scrip traded down 41 cents at $11.39.

Shares in Consolidated Media dropped seven cents to $2.26.

The retail sector also experienced falls.

Woolworths edged down three cents to $25.47, while Wesfarmers dropped 85 cents to $22.05.

Harvey Norman lost six cents to $3.05 and upmarket retailer David Jones was off 18 cents to $3.65.

The most traded stock by volume was GPT Group, with about 95.4 million shares changing hands for $40.04 million.

Shares in GPT group ended the day down two cents at 42.5 cents.

Preliminary market turnover reached 2.17 billion shares worth $5.1 billion, with 282 up, 756 down and 279 unchanged.

- AAP