Australian shares plunge on economic fears

Australian shares remained around four per cent lower at noon as fears of a new global economic crisis gripped the local market.

At 1200 AEST on Friday, the benchmark S&P/ASX200 index was down 168.7 points, or 3.94 per cent, at 4,107.8 while the broader All Ordinaries index was down 183 points, or 4.2 per cent, at 4,169.9.

On the ASX 24, the September share price index futures contract was 169 points lower at 4,073 points, with 41,444 contracts traded.

Earlier today Banks dropped sharply, with ANZ shares falling by more than five percent, Westpac and National Australia Bank by more than four percent, and Commonwealth Bank by more than two percent.

But Federal Treasurer Wayne Swan said Australia is on stronger economic ground than Europe and the United States.

"Australians should never forget that our economic credentials are among the strongest in the developed world," he told reporters in Brisbane.

"Australia has a proven track record of dealing with global economic uncertainty.

"There is just a world of difference between the situation in Australia and the situation in Europe and the United States."

Mr Swan said growth in the Asia-Pacific region remained strong, and Australia's financial institutions were robust.

"We are located in the right part of the world at the right time," he said.

He said economic power was shifting from the west to the east, and that would have an important bearing on Australia amid times of economic uncertainty.

However, Mr Swan said the nation was not immune to global events, as shown by the fall on the share market, but pointed to Australia's low unemployment, low public debt, "robust" financial institutions and "a huge pipeline of mining investment" as signs of local economic stability.

Today's diving stocks was not unexpected following overnight downturns in Europe and Wall Street.

The Dow Jones Industrial Average plunged 4.3 per cent in its worst one-day drop since the financial crisis, while European stocks also fell more than three per cent.

The Australian dollar also dropped overnight — down more than two US cents, trading at 104.63 US cents at 7am (AEST).

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