Australian shares fell 1.5 per cent, breaking a six-day winning streak, as investors took an interest rate cut from the central bank as a signal that the eurozone debt crisis will hurt the local economy.

At the close on Tuesday, the benchmark S&P/ASX200 index was down 64.1 points, or 1.5 per cent, at 4,257.2, while the broader All Ordinaries index fell 63.3 points, also 1.5 per cent, to 4,316.2.

On the ASX 24, the December share price index futures contract was down 55 points at 4,264, with 30,787 contracts traded.

The Reserve Bank of Australia cut the cash rate by 0.25 basis points to 4.25 per cent, its second successive rate cut in as many months.

Dealers said the move, which had been debated by economists in the run up to the meeting, was a sign that contagion from the eurozone debt crisis was having a growing impact on Australia’s economy.

“While the European situation is getting a lot of the attention, its impact on China could affect our economy in a big way,” said Cameron Security’s client adviser Adrian Leppinus.

“The RBA’s obviously seeing signs that things in Europe are coming to our shores.”