AUSTRALIAN shares recovered some lost ground from steep losses earlier today, but finished in the red following a negative US lead. The Australian dollar rallied to US61.45c this afternoon after spending most of the day just above US60c, the lowest level in more than five years. It compares with yesterday’s close of US61.19c. The benchmark S&P/ASX 200 recovered some earlier losses in the afternoon to finish down 14.6 points, or 0.4 per cent, to 3794.6, off its morning low of 3724.8 but nevertheless its lowest close in four years. The broader All Ordinaries lost 12.9 points to 3755.4 after US shares fell more than 2 per cent, with most of the losses occurring in the last few minutes of trading, and European shares fell as much as 4 per cent. Japanese shares had followed the negative lead from the northern hemisphere before rebounding this afternoon. The Nikkei 25 sank below the key 7000-point level for the first time in 26 years, dropping 2.3 per cent in early trading on fears of a global recession. The index was up 3.7 per cent this afternoon as the Japanese Government announced a ban on naked short-selling to try to stabilise the market, following similar moves in the US, Australia and some European countries. Hong Kong’s Hang Seng bounced back up more than 6 per cent today after falling nearly 13 per cent on Monday. Traders said losses in Australian shares would have been more severe had it not been for the sharp rebound in base metal prices on the London Metal Exchange last night. Market heavyweights BHP Billiton rose 76 cents (3.1 per cent) to $25.36 and Rio Tinto jumped $3.60 (5.6 per cent) to $68.25 on the strength of the LME rally. “The market would have been weaker if it wasn’t for the strength in the resources,” said Andrew Sekely, head of Australian equities at Intersuisse.

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