Australian stocks were over six per cent lower at noon, after US shares plunged to fresh five-year lows overnight.

Approximately $69 billion has been wiped off the value of All Ordinaries stocks so far Friday, and $170 billion since last Friday's close.

At 1200 AEDT, the benchmark S&P/ASX200 was down 282.3 points, or 6.53 per cent, at 4038.6, while the broader All Ordinaries had fallen 280.1 points, or 6.53 per cent, to 4011.2.

On the Sydney Futures Exchange, the December share price index futures contract had lost 235 points to 4065, on volume of 22,759 contracts.

CMC Markets senior dealer Matthew Lewis said the local indices falling below 4000 points in trading Friday morning -- at around 1130 AEDT -- had been a psychological blow to investors.

"It really is total market capitulation today.

"We've seen the market fall below quite a psychological level today, being the 4000 barrier, which is pretty important for the market," Mr Lewis said.

"It has bounced back a little bit since then but going below that is the lowest we've seen for five or six years.

"The damage is broad-based ... across all of the major sectors with the majority of the selling pressure coming out of the financials and also out of the materials sector."

At 1203 AEDT, National Australia Bank had fallen $1.75, or 7.37 per cent, to $21.98, Commonwealth Bank was down $2.41, or 5.68 per cent, to $39.99 and ANZ Banking Group had lost $1.03, or 6.19 per cent, to $15.62.

Westpac had shed $1.30, or 6.05 per cent, to $20.20 and its takeover target St George Bank had dropped $1.87, or 6.77 per cent, to $25.77.

In the big miners, BHP Billiton was down $2.21, or 7.41 per cent, to $27.63, while rival Rio Tinto declined $5.23, or 6.70 per cent, to $72.78.

US stocks plunged for a seventh straight session overnight, as investors worried that recent moves by authorities worldwide to thaw frozen credit markets might not be enough to avert global recession.

The Dow Jones Industrial Average lost 678.91 points, or 7.33 per cent, to end at 8,579.19, its first close below 9,000 since 2003.

The Nasdaq slumped 95.21 points, or 5.47 per cent, to 1,645.12 and the Standard & Poor's 500 index retreated the most, by 75.02 points, or 7.62 per cent, to 909.92.

Mr Lewis said the market had lost all confidence following massive falls on Wall Street. Consistent gains were unlikely to be made in the foreseeable future.

"We're still really tied to the US, so it's really a wait-and-see game, but there's definitely no confidence in the market at this stage," Mr Lewis said.

"We are really looking forward to the US and the European markets for any sense of positive direction at this stage, but we're just not seeing it at the moment.

"Fundamentally, there's not a lot of scope for good economic news to come out.

"We might see some short-term positive bounces, but I think it's going to be some time before we see any continuing strength back into the equity markets."

Mr Lewis said that, although gold rallied this week, the commodity was still in the red today as investors gave the market an indiscriminately wide-berth.

"Traditionally, there's safe-haven buying in gold but I think at the moment a lot of people are sitting on their hands and staying out of most markets, preferring a more wait-and-see approach," he said.

At 1220 AEDT, spot gold was trading in Sydney at $US918.70 an ounce, up $US10 on Thursday's close of $US908.70.

Among gold stocks, Newcrest had fallen 78 cents, or 2.92 per cent, to $25.92, Newmont had lost 30 cents, or 5.77 per cent, to $4.90 and Lihir Gold was down five cents, or 1.89 per cent, at $2.59.

Oil prices closed at their lowest level in a year overnight after OPEC signalled it may try to slow crude's downward spiral by cutting production.

New York's main contract, light sweet crude for delivery in November, fell $US2.36 to close at $US86.59 a barrel.

Woodside Petroleum was down $3.68, or 8.78 per cent, at $38.24, Oil Search shed 38 cents, or 9.16 per cent, to $3.77 and Santos lost $1.59, or 11.28 per cent, to $12.51.

The retailers were weaker. At 1226 AEDT, Woolworths had fallen $1.69, or 6.04 per cent, to $26.31, Coles owner Wesfarmers gave up $1.65, or 6.57 per cent, to $23.45, upmarket department store David Jones was down 21 cents, or 6.14 per cent, at $3.21 and Harvey Norman was seven cents lower, or 2.56 per cent, at $2.66.

In media at 1231 AEDT, Fairfax had lost eleven cents, or 4.51 per cent, to $2.33, News Corp was down 80 cents, or 5.42 per cent, at $13.95 and its non-voting scrip had lost 67 cents, or 4.60 per cent, to $13.88.

In company news, financial services minnow Tasmanian Perpetual Trustees Ltd is to merge with the Apple Isle's MyState Financial Credit Union, with the combined entity entering the top-300 companies on the Australian Securities Exchange.

TPT shares were 42 cents higher, or 11.26 per cent, at $4.15.

Agribusiness AWB Ltd says it has renegotiated two of its working capital facilities.

AWB shares were 31 cents lower, or 11.57 per cent, at $2.37.

Funds manager Henderson Group Plc has downgraded its guidance for calendar 2008 due to deteriorating financial markets.

Henderson shares were 56.5 cents lower, or 25.11 per cent, at $1.685.

At 1236 AEDT, the most traded stock by volume was Broad Investments, with 68.127 million units changing hands worth $68,478.

Broad Investments were up 0.1 cent, or 100 per cent, at 0.2 cent.

Market turnover was 986.97 million shares, valued at $2.8 billion, with 85 stocks up, 1,107 down and 208 unchanged.