THE Australian share market plunged almost 6 per cent to a four-year low yesterday, following heavy falls on Wall Street after the US Government refused to buy banks' soured mortgage assets.
The S&P/ASX200 index dived 230 points, or 5.86 per cent, to 3697.3 -- its lowest close since October 25, 2004, and the All Ordinaries fell 211.2 points, or 5.44 per cent, to 3672.4 -- its weakest close since October 1, 2004.
The Sydney Futures Exchange December share price index contract closed off 233 points at 3753, on volume of 31,543 contracts.
Local falls that wiped about $57 billion off the market mirrored weaker performances in Asia, as investors took an increasingly sour view of the world economy.
Macquarie Equities adviser Helen Spencer said the US lead and flow-on from Asia dragged down local shares.
"The market is down across the board, with both industrials and the resource sector trading lower," Ms Spencer said.
Commonwealth Bank shares dropped $2.10, or 5.98 per cent, to $33 after it said provisioning for doubtful corporate loans would increase because of the economic slowdown. Other banks were weaker. National Australia shed 53c, or 2.66 per cent, to $19.40, Westpac lost $2.13, or 11.15 per cent, to $16.97, while ANZ was $1.35, or 8.77 per cent lower, at $14.05. St George lost $2.50, or 9.43 per cent, to $24 after shareholders approved its merger with Westpac.
IG Markets research analyst Ben Potter said the bear market was entering a new phase.
"Markets seem to be falling under their own weight," Mr Potter said.
"There are simply not enough buyers to support prices, let alone move them higher."
Mining giant BHP Billiton lost $3.30, or 11.66 per cent, to $25, while Rio Tinto retreated $6.20, or 8.24 per cent, to $69.
Woodside dropped following weaker oil prices even though it said it would achieve record production, revenue and profit in the 2008 calendar year. It closed $3.09, or 7.73 per cent, lower at $36.90. Oil Search fell 2c to $4.75 and Santos dropped $1 to $12.95.
Fairfax Media fell 10.5c to $1.625 after saying it expected tough trading conditions for some time.
News Corporation shed 69c, or 5.61 per cent, to $11.60, while its non-voting scrip was down 56c, or 4.65 per cent, at $11.49.
Seven sank 34c, or 6.05 per cent, to $5.28 and Ten dropped 3c to $1.335.
The spot price of gold in Sydney closed at $US714.75 an ounce, down $US22.05 on Wednesday's local close of $US736.80 an ounce.
Gold miners fell: Newcrest by $1.04 to $19.96, Lihir by 21.5c to $1.775 and Newmont by 38c to $3.60.
Wesfarmers fell $1.19 to $18.06 after it reassured shareholders there were improvements at its Coles arm and concerns about its balance sheet were unfounded.
Harvey Norman shares shed 27c, or 10.07 per cent, to $2.41, Woolworths was down $1.26 at $27.66 and David Jones fell 6c to $3.04.
Brisconnections Unit Trusts was the most traded stock by volume, with 80.73 million securities worth $80,729 changing hands. It was steady at 0.1c.
Market turnover was 1.39 billion shares, valued at $4.4 billion, with 200 stocks up, 835 down and 267 unchanged.
