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SYDNEY - The Australian share market closed more than one per cent lower following falls in the resources and financial sector after negative leads from overseas.

At 1615 AEDT, the benchmark S&P/ASX200 was down 51.1 points, or 1.48 per cent, at 3,413.2, while the broader All Ordinaries dropped 45.3 points, or 1.33 per cent, to 3,366.9.

On the Sydney Futures Exchange at 1615 AEDT, the March share price index contract was 63 points lower at 3,378 on a volume of 25,809 contracts.

"All sectors are down but it's financials and materials that are being hit," IG Markets research analyst Ben Potter said.

"There was warnings from the big credit ratings agency's on banks exposures to Eastern European debt."

"The US financial were hit badly overnight as well."

In the resources sector, mining giant Rio Tinto added 48 cents to $50.55, its rival BHP Billiton dropped $1.41 to $30.31.

Among the major banks, ANZ lost two cents to $12.40, Commonwealth Bank added 15 cents to $29.16 and National Australia Bank added 26 cents to $18.14.

Westpac Banking Corporation shares lost 30 cents to $16.48 after it announced a $300 million exposure to struggling investment firm Babcock & Brown Ltd.

The exposure pushed the bank's impaired loans up $930 million during the first quarter of financial year 2009.

On Wall Street overnight, stocks tumbled by more than three per cent and the Dow Jones industrial average sank near the multi-year lows it reached last November.

The Dow dropped 297.81, or 3.79 per cent, to settle at 7,552.6 - just half a point away from the blue-chip index's five-and-a-half month closing low of 7,552.29 on November 20 last year.

Insurance Australia Group Ltd (IAG) warned that its first half profit will slump to $4 million after earnings were pummelled by a high number of claims and volatile financial markets.

IAG shares are in a trading halt and last traded at $3.46 before it announced that it would undertake a capital raising.

Fund manager Perpetual Ltd reported an 84 per cent drop in its first half profit due to sharp falls in equity markets amid the global financial crisis. Its shares closed 54 cents lower at $25.51.

Oil and gas producer Woodside Petroleum Ltd has posted a sharp rise in annual net profit on stronger output and commodity prices, and says it aims to produce more in 2009.

Woodside's shares gained $1.10 or 3.4 per cent, to $33.50 while rival Santos lost 42 cents to $14.23 and Oil Search dropped 20 cents to $4.46.

CSR Ltd downgraded its earnings forecast due to a deterioration in construction markets and a significant decline in the price of aluminium. Its share price fell 24.5 cents to $1.24.

Shares in Fairfax Media Ltd have fallen under $1 for the first time as the publisher prepares its first half results next week. It closed 1.5 cents lower at $1.03 after dropping to 97 cents earlier in the day.

CSL Ltd, developer of the cervical cancer vaccine Gardasil, has delivered an increase in first half net profit and forecast stable conditions in an otherwise uncertain economic environment. Its shares were 80 cents lower at $36.60.

Noni B Ltd has slashed its dividend after difficult trading conditions led to a 53 per cent fall in half year profit. Its stock dropped two cents to 91 cents.

Among the gold stocks, Newcrest added $2.02, or 5.89 per cent, to $36.30, Lihir Gold gained nine cents to $3.56 and Newmont grew 13 cents to $6.63.

At 1638 AEDT, the spot price of gold in Sydney was US$972.40 an ounce, up US$13.25 on Tuesday's local close of US$959.15.

The top traded stock was Oz Minerals, with 164 million shares worth $100.4 million changing hands.

Its stock was 1.5 cents, or 2.33 per cent, lower at 63 cents.

Preliminary market turnover was 1.41 billion shares worth $4.08 billion, with 330 stocks up, 544 down and 283 unchanged.