PERTH - The Australian share market closed two per cent lower, weighed down by profit taking and a weaker resources sector on the back of softer oil and gold prices.

The benchmark S&P/ASX200 index was down 82.6 points, or 2.06 per cent, at 3,934.6, while the broader All Ordinaries index fell 76.8 points, or 1.92 per cent, to 3,932.5 points.

On the Sydney Futures Exchange at 1617 AEST, the June share price index contract was 70 points lower at 3,953 on a volume of 29,376 contracts.

CommSec market analyst Juliette Saly said the materials sector was the most sold-off and there was also weakness in energy and financial stocks.

"We're seeing all the major sectors in the red today," Ms Saly said.

"There is a little bit of speculation that Rio Tinto, once again, might be looking towards a rights issue, so it's down.

"Rio has had a really good run throughout the whole week so there's probably a bit of profit taking coming through there as well."

Rio Tinto plunged $4.70, or 6.56 per cent, to $66.90, BHP Billiton sank $1.92, or 5.18 per cent, to $35.11 and OZ Minerals gave up three cents, or 3.33 per cent, to 87 cents.

OZ Minerals said it had not received a superior recapitalisation proposal to the current deal on offer by a Chinese company, amid persistent rumours to the contrary.

ANZ was the strongest performer among the major banks, putting on 48 cents, or 2.93 per cent, to $16.84. Commonwealth Bank inched one cent lower to $36.79, Westpac was down three cents at $19.14 and National Australia Bank dipped 90 cents, or 3.89 per cent, to $21.21.

"Macquarie Group, which has had a dream run this week, is down and we can attribute that to profit taking," Ms Saly said.

"It's put on about 14 per cent so far this week."

Macquarie shares retreated 35 cents to $36.20.

Ms Saly said the best performing defensive stocks were Telstra, CSL and Woolworths.

Shares in Telstra rose seven cents to $3.28, CSL gained 11 cents to $30.01 and Woolworths advanced 33 cents to $26.63.

Among other retailers, Coles owner Wesfarmers plummeted $1.20, or 5.25 per cent, to $21.66, Harvey Norman fell 13 cents, or 3.94 per cent, to $3.17 and David Jones lost 20 cents, or 4.85 per cent, to $3.92.

Energy stocks were softer after crude oil prices backtracked overnight from seven-month highs.

Woodside was down $1.60, or 3.57 per cent, at $43.20, Santos was 46 cents, or 3.08 per cent, weaker at $14.47 and Oil Search gave up 23 cents, or 4.01 per cent, to $5.51.

Gold mining stocks lost ground. Newcrest fell $1.03, or 2.99 per cent, to $33.37, Newmont was down 25 cents, or 4.13 per cent, at $5.80 and Lihir dipped 13 cents, or 3.95 per cent, to $3.16.

Sino Gold shed five cents to $6.46 after South Africa's Gold Fields sold its 19.9 per cent stake in Sino Gold to Eldorado Gold Corporation, prompting Sino Gold and Gold Fields to amended their alliance agreement.

Making headlines on Thursday, property company Mirvac Group says it will undertake an equity raising of up to $1.1 billion to accelerate the implementation of its simplified business strategy.

Its shares remain in a halt, last trading at $1.33, while the capital raising takes place.

Among media stocks, News Corp was down 28 cents to $14.32 while its non-voting scrip was steady at $12.70. Fairfax was 2.5 cents cheaper at $1.225.

The top-traded stock by volume was GPT Group, with 192.95 million shares worth $106.51 million changing hands.

Its securities inched two cents, or 3.7 per cent, higher to 56 cents after it announced it had completed the sale of a shopping centre in Prague as part of its exit from a joint venture with Babcock & Brown.

Preliminary market turnover was 2.19 billion shares worth $5.65 billion, with 442 stocks up, 602 down and 329 unchanged.