Bargain hunting was scarce as the Australian share market followed the overnight slide on Wall Street deep into the red.
Following the 2.1 per cent tumble on the US S&P 500 index, the S&P/ASX 200 index opened 0.9 per cent down, and after a brief rally it slipped to close 52.1 points, or 0.95 per cent, down at 5428.6 slightly off the day's low.
There was no clear catalyst for the sell-off except perhaps evidence of "good news is bad news" for overvalued asset prices as the drop in US weekly jobless claims to a seven-year low ensured the US Federal Reserve would continue to taper its bond purchasing program until it expires in October.
"Sharp moves on little news are always a little disconcerting: the US economic data was good and the Fed is still on the dovish side," National Australia Bank currency strategist Emma Lawson said.
"We are told this is being driven by position unwinding and as it continues there are margin calls pushing it lower. If so, it may not last long."
The Australian dollar reversed its US0.8 cent surge yesterday to trade at US93.70 cents, while government 10-year yields dropped 4.2 points to 4.012 per cent.
The Shanghai composite index was off 0.1 per cent at the close of the ASX following an uptick in consumer inflation from 2 to 2.4 per cent and a drop in producer price inflation from minus to per cent to minus 2.3 per cent.
It was the 25th straight month of contraction that signalled ongoing like of pricing power in the world's second biggest economy.
"Today's inflation release, combined with the downside surprise in trade data published yesterday, suggest that slower economic growth momentum, instead of inflation, is higher on the policy agenda," HSBC China economist Qu Hongbin said.
In Tokyo the Nikkei index tumbled 2.5 per cent as the yen soared against the US dollar on the reversal of so-called "carry trades" that have chased global asset prices higher.
Gold climbed $US7 to $US1319 an ounce, copper lost 0.3 per cent to $US6630 a tonne and spot iron ore slipped 0.2 per cent to $US119.10 a tonne on Thursday.