Market off sharply mid-session
Market off sharply mid-session

Australian stocks continued to tumble mid-session after local investors panicked over the debt crisis in Europe.

Australian shares opened at their lowest level this year and then continued their descent all morning in response to falls on Europe's main stock markets and the euro hitting a new four-month low against the US dollar.

However, Lonsec strategist Michael Heffernan said Australian shares had fallen even further than European markets.

"Greece is certainly the word," he said.

"The European markets seem to take it much more in its stride than we do. Their market is only down between one and two per cent and here we are blowing through the two per cent mark. Again we exaggerate the moves that have been going on around the world."

He said the local market's severe reaction to the falls in Europe could be attributed to our strong reliance on resources.

"Maybe it's because we're so far away we feel we have less control over what's going on," he said.

"Maybe we don't hear all the information that the others are getting...or it could be because we're so heavily focused on resources that slowdowns in world economies certainly have an impact."

At 10.01am, the benchmark S&P/ASX200 index was down 81.5 points, or 1.96 per cent, at 4075.9 while the broader All Ordinaries index was down 84.3 points, or two per cent, at 4124.2.

On the ASX 24, the June share price index futures contract was 81 points lower at 4079 with 23,493 contracts traded.

A week of turmoil on global markets has led to all of this year's gains being wiped off the local Australian market.

The previous 2012 lowest point for the All Ordinaries was on January 3 when the index reached 4155 points while the lowest point on the ASX/200 was at January 3 when it reached 4101 points.

Due to the uncertainty, the best performing sector at the open was gold stocks.

The spot price of gold in Sydney was $US1576.22 per fine ounce up $US1.45 from Friday's earlier level of $US1574.77 per fine ounce.

Australia's biggest company BHP was 3.27 per cent lower at $31.70, while Rio was down 3.94 per cent at $55.87.

Fortescue metals lost 7.64 per cent to $4.53.

The major banks were all around two per cent lower.

US stocks have closed with losses well above one per cent as negative news continued from Europe.

National turnover was 814 million securities worth $2.161 billion.

The West Australian

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