Heavy selling keeps stocks below 4,000pts

An estimated $23 billion has been wiped off the Australian share market as it fell further in intra-day trading.

At noon the benchmark index remained below 4,000 points amid widespread selling on disappointing US and European economic news.

At 1200 AEST on Monday, the benchmark S&P/ASX200 index was down 70.8 points, or 1.74 per cent, at 3,993.1, while the broader All Ordinaries index was down 74.2 points, or 1.78 per cent, at 4,042.7.

On the ASX 24, the June share price index futures contract was down 73 points at 3,997, with 18,393 contracts traded.

The local market dropped after major indices in Europe and on Wall Street slumped on the back of disappointing US jobs figures, slow US manufacturing growth, record unemployment rates in Europe and weak Chinese manufacturing data.

Australia's market opened at a six-month low and bounced for just 10 minutes before falling again, and by noon was trading near its lows of the session, Geoff Saffer, head of research at Australian Stock Report, said.

"The market has taken an absolute beating," he said.

"You'd expect to see some stop losses getting hit and some investors really moving to the sidelines.

"We haven't seen a big crash below 4,000 yet, so that specific technical impact hasn't made itself felt today."

More selling of risk assets dominated intra-day trading and cut 0.5 per cent off the Australian dollar, with Telstra and gold stocks the only bright spots as investors rushed into safe havens.

Telstra firmed one cent to $3.65 by 1206 AEST, while gold major Newcrest Mining jumped 77 cents, or 3.19 per cent to $24.88 after gold surged 3.5 per cent in offshore markets on Friday.

The spot price of gold in Sydney traded at $US1,616.00 per fine ounce by 1207 AEST, catapulting $US58.11 from Friday's local close of $US1,557.89.

Resources stocks were among the hardest hit, with market heavyweight BHP Billiton falling 67.5 cents, or 2.13 per cent to $31.055.

Rio Tinto slumped $1.87, or 3.37 per cent, to $53.66, and energy major Woodside Petroleum lost $1.09 or 3.41 per cent, to $30.87.

"We've had a two-speed economy and it's starting to look like the mining sector isn't necessarily going to be able to bail out the rest of the economy with super-strong growth," Mr Saffer said.

Banks and financials also suffered heavy losses, with the big four lenders led lower by ANZ Banking Group which lost 45 cents, or 2.12 per cent to $20.79.

Consumer discretionary stocks were also hit hard. Retailer Myer Holdings dropped six cents, or 3.12 per cent to $1.86 - a record low - while Kathmandu Holdings plunged six cents, or 5.45 per cent, to $1.04 after the stock traded ex-dividend.

By 1221 AEST national turnover was 870 million shares worth $1.7 billion, with 140 stocks up, 804 down and 256 unchanged.

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