The sharemarket remains significantly weaker as investors react to surprisingly weak US manufacturing data.
Investors' risk appetite has shrunk after figures showed growth in the US manufacturing sector slowed sharply in January, CMC Markets chief market analyst Ric Spooner said.
"A decline in base metals and a drop in US bond yields shows the market is adjusting to a safer portfolio setting," he said.
"We haven't been immuned to that and that is what is driving us this morning."
Wall Street posted its sharpest fall since last June, and the local All Ordinaries was down 1.35 per cent in early afternoon trade.
All the major banking and mining stocks were down, although Australia's biggest goldminer Newcrest Mining was up 33 cents to $10.03.
Mr Spooner said consolidation of gold prices and a typical "flight to safety" reaction was bolstering gold stocks.
He said the market was unlikely to have any strong reaction to this afternoon's Reserve Bank of Australia's interest rate decision, as the central bank is widely anticipated to keep interest rates at 2.5 per cent.
BHP Billiton was down 66 cents, or 1.8 per cent, at $35.78, Rio Tinto had shed $1.08, or 1.7 per cent, at $64.26 and and Fortescue Metals had lost 10.5 cents, or 1.99 per cent, at $5.175.
Commonwealth Bank was down 97 cents at $73.43, National Australia Bank had fallen 60.5 cents to $32.595, Westpac had dropped 51 cents to $30.48 and ANZ was 46 cents weaker at $29.37.
Along with Newcrest, REA Group was a rare highlight, after the owner of property website realestate.com posted 37 per cent profit growth.
REA shares were up $1.14 at $42.84.
- At noon on Tuesday, the benchmark S&P/ASX200 index was down 72.2 points, or 1.39 per cent, at 5,115.7.
- The broader All Ordinaries index was down 70 points, or 1.35 per cent, at 5,131.9.
- The March share price index futures contract was 81 points lower at 5,064, with 17,318 contracts traded.
- National turnover was 862 million securities worth $1.8 billion.