At 10.43am (AEDT), the benchmark ASX200 index was down 47 points, or 1.2 per cent, at 3762, while the broader All Ordinaries lost 41.2 points, or 1.09 per cent, to 3727.
On the Sydney Futures Exchange, the December share price index futures contract was up 20 points at 3811, on a volume of 8148 contracts.
The banking sector and energy stocks led the early losses.
ANZ shares dropped 29 cents to $16.71, NAB fell 60 cents to $23.32 and Commonwealth Bank lost 36 cents to $39.66.
Westpac shed 15 cents to $19.84 and St George Bank dipped 17 cents to $26.22.
Further falls in oil prices impacted energy stocks.
Woodside Petroleum fell 60 cents to $36.30, Oil Search dropped four cents to $3.11, and Santos lost 33 cents to $11.42.
However the major miners opened stronger on the back of improving commodity prices.
BHP Billiton added 59 cents to $25.19, while rival Rio Tinto gained $1.83 to $66.48.
ABN Amro Morgans private client adviser Bill Bishop said the gains by the major miners were shielding the market from some of the global negativity.
"BHP and Rio are carrying the market to some extent, so far," Mr Bishop said.
"Given the fall on Wall Street overnight, I expected the market to be in the negative, and so far we're seeing that (at) a slow and steady rate."
Given the falls in Asian markets and volatility on Wall Street, the local bourse was holding up fairly well, he said.
"There's no cause to put our hands up and cheer as yet, but our banks are in better shape than others and resources stocks remain strong," Mr Bishop said.
At 10.24am (AEDT), spot gold was trading in Sydney at $US729.05 an ounce, up $US2.40 on yesterday's close of $US726.65.
Among local gold stocks, Newcrest Mining was up nine cents to $17.99, while Newmont Mining fell 28 cents, or 7.41 per cent, to $3.50.
Lihir Gold gained 6.5 cents, or 4.14 per cent, to $1.635 after reporting record third quarter gold production and maintaining its annual production forecast.
Overnight on Wall Street a highly volatile session ended with a big last-minute loss, as worries about a protracted downturn in the economy persisted.
The Dow Jones Industrial Average dropped 203.18 points, or 2.42 per cent, to close at 8175.77 after being up as much as 200 points during the day.
The Nasdaq lost 46.13 points, or 2.97 per cent, to 1505.90 and the broad-market S&P500 fell 27.85 points, or 3.18 per cent, to 848.92.
Making news, wealth manager BT Investment Management has reported a $14.3 million profit from its first year of operation, saying a strong balance sheet positions it to take advantage of growth opportunities in current dislocated markets.
BT shares were steady at $2.58.
Regional pay television operator Austar has lifted third quarter earnings by 14 per cent and says it remains on track to meet its calendar 2008 guidance.
Austar shares were flat at 90 cents.
Retailer Harvey Norman says sales for the month to October 26 were down 3.6 per cent on the corresponding period last year.
Harvey Norman shares were down four cents at $2.55.
In other retail stocks, Coles owner Wesfarmers shed $1.00, or 5.05 per cent, to $18.79 while Woolworths dropped 45 cents to $25.60.
At 10.46am (AEDT), the most traded stock by volume was property company GPT Group, with 10.8 million units changing hands worth $8.3 million.
GPT shares were down 5.5 cents, or 6.55 per cent, to 78.5 cents.
Market turnover was 218.3 million shares, valued at $656.6 million, with 223 stocks up, 410 down and 223 unchanged.
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