The Australian stock market plunged in morning trading as the repercussions of billions of dollars in bad loans in the US hit worldwide.
Central banks in Europe and Japan injected huge sums of money into their economies to offset losses as investors sell out, but the cold continues to spread with French bank BNP Paribas freezing three funds that had invested in so-called sub-prime mortgages in the US.
At 1029 AEST, the benchmark S&P/ASX200 index had fallen by 163.8 points or 2.66 per cent to 6001.8 while the All Ordinaries dropped 165.3 points or 2.67 per cent to 6022.4.
On the Sydney Futures Exchange, the September share price index contract had lost 166 points to 5985 on a volume of 11,392 contracts.
In the US, evidence that the sub-prime crisis is having a global impact and spreading to other markets, hammered financial stocks.
Back home, Macquarie Bank fell $4.73, or 6.10 per cent, to $72.80 and fellow investment bank Babcock & Brown fell $1.37, or 5.34 per cent to $24.29.
Macquarie Equities associate director Lucinda Chan said the local bourse was tracking world markets.
"BNP just blocked three asset-backed funds and of course that hit pretty hard on Wall Street, where you saw Goldman Sachs fall about six per cent, Bear Stearns another six, Lehman I think was down seven.
"And then of course we had a report that wasn't very good, with Home Depot also getting hit very hard.
"So it's an all-rounder, it's not just one effect, but I think the focus is very much on the sub-prime woes and everybody's must be having a bit of a recurring nightmare."
Other local investment houses also fell steeply with Challenger Financial Services down 18 cents, or 3.45 per cent, to $5.03 and Allco Finance Group down 29 cents, or 2.99 per cent, to $9.41.
Retail banks weren't fairing too much better with Commonwealth Bank of Australia off $1.33 to $53.47, National Australia Bank down 75 cents to $38.75, ANZ down 53 cents to $28.44 and Westpac down 39 cents at $26.20.
Mining giant BHP Billiton tumbled $1.36, or 3.71 per cent, to $35.30 and Rio Tinto fell $2.31, or 2.62 per cent, to $85.95 as falling commodity prices exacerbated the global market meltdown.
Newcrest Mining fell 24 cents to $25.76 as the spot price of gold reached $US663.10, down $US10.40 on last night's close.
Woodside Petroleum shed 79 cent to $72.82 on a falling oil price.
Retailer Nick Scali was one of the few market gainers, rising five cents, or about two per cent, to $2.45 after it reported a 6.9 per cent rise in annual profit.
Woolworths dropped 69 cents to $26.47, Publishing and Broadcasting slipped three cents to $18.37, Qantas lost 14 cents to $5.48 and Telstra reversed 11 cents to $4.41 while its instalment receipts dropped nine cents to $2.94.
At 1046 AEST, the top traded stock by volume was Empire Oil & Gas with 141.6 million shares together worth $2.94 million traded.
It's shares were steady at 2.2 cents.
Total market turnover was 782.83 million shares worth $2.17 billion with 105 stocks rising, 1,097 falling and 182 unchanged.
