Australian stocks: Market at lowest level in five years

MELBOURNE - The Australian stock market shed 2.8 per cent on Monday to close at its lowest level in more than five years, following heavy falls in the banking and the big mining sectors.

At the close, the benchmark S&P/ASX200 index was 94.4 points, or 2.82 per cent lower at 3250.1 - its lowest level since December 19, 2003.

The broader All Ordinaries shed 93.1 points, or 2.82 per cent, to 3203.8, and its lowest level since December 11, 2003.

At 1615 AEDT on the Sydney Futures Exchange, the March share price index contract was 73 points lower at 3243, on a volume of 23,961 contracts.

CMC Markets senior dealer Dominic Vaughan said negativity in the financial sector and lower commodity prices had combined to drive the market lower.

"Financial stocks have been hit quite hard and they continue to get sold quite heavily, while BHP and Rio are down as well," Mr Vaughan told AAP.

"The reporting season has been okay but the forward earnings are probably going to come under pressure.

"The housing numbers out today are okay but it looks like we may have pressure on our GDP (gross domestic product) going forward and there is the possibility of no rate cut (by the Reserve Bank of Australia) tomorrow as well."

The domestic market opened two per cent lower following falls on Wall Street on Friday, with the Dow Jones industrial average dropping 119.15 points, or 1.66 per cent, to close at 7,062.93.

Locally, the big miners were weaker, with BHP Billiton losing 88 cents to $27.95 and rival Rio Tinto dropping $3.02 to $44.23.

China's state-backed Chinalco on Monday stressed that its investment in Rio Tinto won't give the company control over Australia's resources or influence over commodity pricing prior to meeting with Foreign Investment Review Board (FIRB) officials.

The banking sector was weaker, with ANZ shedding 21 cents to $13.10, the Commonwealth Bank falling $1.29 to $28.51, National Australia Bank losing 37 cents to $17.51 and Westpac giving up 59 cents to $16.30.

Ratings agency Moody's Investors Service on Monday downgraded the ratings outlook for ANZ Banking Group Ltd, Commonwealth Bank of Australia Ltd and Westpac Banking Corporation because of the potential impact of the economic downturn.

The retailers were mixed, with Woolworths putting on 11 cents to $26.25, Wesfarmers gaining 10 cents to $17.70, Harvey Norman adding five cents to $1.96 and David Jones shedding eight cents to $2.26.

Australia's biggest teleco, Telstra dropped five cents to $3.50, with the company to sell its information technology services unit to Fujitsu for $200 million.

Airline Qantas shed 11.5 cents to $1.45 and said it would again reduce its international fuel surcharges, from Tuesday.

The media sector was mixed, with Fairfax adding 1.75 cents to 88 cents, Consolidated Media Holdings losing 4.5 cents to $1.955, News Corp falling 21 cents to $9.84 and its non-voting shares dipping 35 cents to $8.64.

Fairfax was the most traded stock by volume, with 54.6 million shares changing hands, collectively worth $50.34 million.

The energy sector was weaker, with Woodside dropping $1.53 to $34.27, Santos giving up 47 cents to $15 and Oil Search losing 21 cents to $4.81.

The spot price of gold was trading at US$952.70 an ounce by 1621 AEDT, up on Friday's local close of US$940.95 an ounce.

The gold miners were stronger, with Newcrest adding $2.51 to $33.49, Lihir putting on 21 cents to $3.51 and Newmont finding 33 cents to $6.53.

Preliminary national market turnover was 1.21 billion, worth a total of $3.26 billion, with 285 stocks moving up, 646 stocks moving down and 266 unchanged.

- AAP