Worries about China have been added to concerns about Greece, pushing down the Australian share market by two per cent.
Big falls in commodity prices also weighed upon the resources sector.
Phillip Capital senior client adviser Michael Heffernan said the recent plunge in China’s stock market and continued uncertainty over the resolution of Greece’s debt problems were still clearly influencing investor sentiment.
“The market absorbs all these things, but it is a sentiment thing,” Mr Heffernan said.
He said the recent steep falls in the Chinese stock market were following very sharp rises, and the wild movements did not necessarily reflect what was happening in the Chinese economy.
Mr Heffernan said it was the health of the Chinese economy that directly affected Australian commodity suppliers such as miners BHP Billiton and Rio Tinto and not the movements in the Chinese stock market.
“The share market in China is a sideshow, just as I believe Greece is a sideshow,” Mr Heffernan said.
“We’re getting belted around for no fundamental reason.”
Fears over the plunge on China’s Shanghai and Shenzhen stock markets have spilled into other markets in Asia despite Chinese leaders announcing measures to staunch the losses on its indexes.
Meanwhile European leaders have given a deadline to debt-ridden Greece to submit fresh bailout reform proposals or face ejection from the euro zone.
Adding to investors’ concerns, iron ore prices tumbled 4.6 per cent overnight to below $US50 a tonne.
Among resources stocks, global miner BHP Billiton was 82 cents lower at $25.43, Rio Tinto lost $1.68 to $50.06, and Fortescue shed 11 cents to $1.675.
In the banking sector, ANZ retreated 76 cents to $32.27, the Commonwealth Bank weakened $1.92 to $85.77, National Australia Bank was off 88 cents at $33.33, and Westpac unloaded 60 cents to $33.16.
Explosives and fertiliser maker Incitec Pivot dumped 10 cents at $3.71 as it faces a steep reduction in gas supply at its ammonium nitrate plant in Queensland, which could hit its profits.
Market debutant and alternative energy company Genex Power closed at 21 cents, one cent above its issue price.
Online travel group WebJet climbed 34 cents, or 11.15 per cent, to $3.39 after it said it was on track to lift underlying earnings to $27 million.
Health insurer nib fell 11 cents to $3.36 after it announced a $95 million deal to buy travel insurer World Nomads.
KEY FACTS
* At 1620 AEST on Wednesday, the benchmark S&P/ASX200 index was down 111.9 points, or 2.0 per cent, at 5,469.5 points.
* The broader All Ordinaries index was down 107.5 points, or 1.93 per cent, at 5,456.5 points.
* The September share price index futures contract was 125 points lower at 5,398 points, with 37,634 contracts traded.
* National turnover was 1.94 billion securities worth $4.84 billion.
