The Australian sharemarket had fallen by more than one per cent mid-session with investors following a negative lead from Wall Street on Friday and being spooked by a bailout plan for Cyprus.
At 9.30am, the benchmark S&P/ASX200 index was down 69.4 points, or 1.4 per cent, to 5050.8 points while the All Ordinaries index was down 68.5 points, or 1.3 per cent, to 5060.8 points.
Some Cyprus locals started lining up at ATMS over the weekend to withdraw money after an agreements was struck to impose a levy on bank deposits.
Worries that the move could be spread to other high debt European nations, spurring a repeat of the recent dramas there, led to nervous selling on the Australian stock exchange on Monday morning.
CMC Markets chief market analyst Ric Spooner said while there had been assurances it would not happen elsewhere in Italy or Spain not everyone would believe that.
He said the recent upbeat attitude by investors causing market rises had been due to the European Central Bank agreeing to buy bonds and he did not think people should be panicking yet.
"However events on the weekend suggest a more robust, hard line by European finance ministers," he told AAP.
Locally, most sectors had posted losses.
In resources, BHP Billiton had lost 65.5 cents to $34.895, Rio Tinto shed $1.23 to $60.07 and Fortescue tumbled 12 cents to $3.94.
The banks were also lower, with NAB down 60 cents at $30.70, Westpac dropping 38 cents to $30.51, Commonwealth shedding 63 cents to $69.55 and ANZ 35 cents lower at $28.37.
One bright spot was rail operator Aurizon, whose shares were nearly one per cent up at $4.075.The Queensland government halved its stake on Monday to about eight per cent, netting more than $800 million amid strong investor demand.
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