At 12.00 AEDT, the benchmark S&P/ASX200 index was down 4.32 per cent, falling 177 points to 3903.4.
The broader All Ordinaries index dropped 4.11 per cent to 3893.1.
Man Financial broker Anthony Anderson said a weak lead from Wall Street and falling metal prices had affected the local market.
"It's a pretty average day,'' Mr Anderson said.
"The 60 per cent fall in Asciano's share price has really weighed down on the banks."
The stapled securities of the transport infrastructure company Asciano fell $1.03 or 59.88 per cent to 69 cents this morning.
Among the banks, NAB sank $2.07 or 9.35 per cent to $20.08 after coming out of a trading halt while it conducted a capital raising. The bank raised $3 billion.
ANZ fell 36 cents to $15.54, Commonwealth Bank was down $2.02 to $35.98 and Westpac dipped 86 cents to $19.05.
Mining giant BHP Billiton fell 5.12 per cent to $28.36.
Rio Tinto dropped 4.26 per cent, to $74.68.
Shares in the world's largest share registry, Computershare, fell 51 cents after it cut earnings guidance because of a strong US dollar. Computershare was at $7.28.
Insurance Australia Group shares fell 7 cents to $3.94 after it said premiums could be flat.
Agribusiness Timbercorp cut its full-year profit forecast by more than 20 per cent, due to costs from replacing grapes.
Timbercorp stock fell 4 cents to 47.5 cents.
In the energy sector, Woodside Petroleum was down $2.21 at $39.00, Santos was 83 cents lower at $13.51 and Oil Search was down 7 cents at $4.86.
At 12.18pm AEDT, spot gold in Sydney was $US743.55 an ounce, down $US3.60 on yesterday's local close.
Gold miners were mixed. Newcrest was down 4.7 per cent to $22.10, Lihir Gold lost 12 cents to $1.99 and Newmont gained 11 cents to $4.00.
On the Sydney Futures Exchange, the December share price index futures contract shed 149 points to 3949 on a volume of 14,980 contracts.
Furniture and electrical retailer Harvey Norman Holding shares shed seven cents to $2.82 after it announced that sales at its stores declined 2.8 per cent in recent months.
Other retailers were lower, with Woolworths down 69 cents at $28.49, David Jones felling two cents to $3.15, the Reject Shop losing 11 cents to $9.46 and Coles owner Wesfarmers dropping $1.82, or 7.87 per cent, to $21.18.
Among media stocks, Seven Network dropped 16 cents to $5.39 and Fairfax Media lost 16 cents, or 8.56 per cent, to $1.71.
News Corporation, which is the parent company of the publisher of news.com.au, fell 36 cents to $12.28 and News' non-voting scrip dropped 42 cents, or 3.34 per cent, to $12.16.
At 12.42pm AEDT, GPT Group was the most traded stock by volume, with 73.99 million shares worth $64.37 million changing hands. GPT shares were down three cents, or 3.02 per cent, at 96.5 cents.
Market turnover was 621.3 million shares, valued at $1.72 billion, with 181 stocks up, 621 down and 253 unchanged.
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