Australian share prices closed down 2.9 percent on Monday on concerns over domestic inflationary pressure and the state of the ailing US economy, dealers said. The benchmark S&P/ASX 200 closed down 166.9 points at 5,580.4. The index has fallen 18.5 percent from its all time high of 6,851.5 on November 1 last year.
The broader All Ordinaries plunged 168.5 points to 5,630.9. A total of 1.64 billion shares worth 5.94 billion dollars (5.2 billion US) were traded. Decliners outnumbered gainers 1,018 to 326, with 296 stocks unchanged. "I think we have had a terrible lot of distressed selling," said Stuart Smith, a private advisor at Bell Potter Securities. Smith said the market might have a further 200 points to fall, which would take the overall loss from its November peak to more than 20 percent.
"These sort of things happen every 10 years or so, so you just have to strap yourself in - but the market always recovers to a new level above its previous record high," he said.
In the banking sector, National Australia Bank fell 1.06 dollars to 35.20, Commonwealth Bank was down 2.42 to 50.78, ANZ dropped 73 cents to 26.20 and Westpac lost 78 cents to 25.77. Rio Tinto, which was bid up on Friday on talk that BHP Billiton would soon improve the terms of its merger proposal, fell 9.75 dollars or 7.9 percent to 114.75 dollars. BHP, which is yet to come through with an improvement on its 3-for-1 share offer, ended down 1.51 dollars or 4.3 percent at 33.29 dollars.