Australian shares suffered their worst loss in a day since February amid jitters over a cutback in US stimulus measures and weaker than expected Chinese manufacturing data.
The major ASX 200 and All Ordinaries index closed more than two per cent down.
The US Federal Reserve signalled overnight that it could start winding back its $US85 billion-a-month cash stimulus program as early as September.
The effect of that was to trigger a big sell-off of equities into the US, a movement into bonds, a stronger US dollar and weaker Australian dollar, which makes holding Australian equities less attractive to foreign investors.
The worst performers were the miners, suffering a three per cent fall, which was the sector’s worst day since April.
That was made worse by the release of the HSBC group’s PMI index showing manufacturing activity shrinking in China in May.
Market heavyweight BHP Billiton fell 84 cents, or 2.55 per cent, to $32.15, while diversified miner Rio Tinto had sunk $1.78, or 3.27 per cent, to $52.60.
Fortescue Metals stocks plunged 22 cents, or 6.55 per cent, to $3.15 after it cut its guidance for iron ore shipments.
Its shares are down 42 per cent since February.
All the big banks were down, with ANZ losing 70 cents, or 2.5 per cent, to $27.65, CBA was $2.10, or 3.07 per per cent, worse off at $66.26, NAB had shed 84 cents, or 2.8 per cent, to $29.20, while Westpac had dropped $1.07 cents, or 3.66 per cent to $28.16.
News Corp’s second day of trading as two split companies was better than its first.
The new News Corp publishing arm’s voting stock shot up $2.20, or 15.12 per cent, to $16.75.
KEY FACTS
* At the close on Thursday, the benchmark S&P/ASX200 index was 103 points, or 2.12 per cent, lower at 4,758.4.
* The broader All Ordinaries index was down 97.9 points, or 2.02 per cent, at 4,743.9.
* The September share price index futures contract was 127 points lower at 4,709, with 44,352 contracts traded.
* National turnover was 1.8 billion securities worth $6.7 billion.
