Sharply lower base metal prices in London dragged down miners, while new gloomy data in the US overnight renewed recession fears on Wall Street.
At 12.10pm (AEDT), the benchmark S&P/ASX200 index was down 143.7 points, or 3.3 per cent, at 4192.9. The broader All Ordinaries index had lost 140.4 points, or 3.27 per cent, to 4146.9.
CommSec market analyst Elvina Simpson said stocks were being heavily sold off in every sector, reversing yesterdays gains and bringing the recent rally to an end.
"Financials are heavily in the red, with Macquarie Group down 5.14 per cent to $33.20 (at 12.08pm AEDT),'' Ms Simpson said.
"Energy stocks are down by about 7 per cent."
"But the Aussie dollar got close to 80 US cents on better than expected unemployment figures.''
Mining giant BHP Billiton was down 6.93 per cent to $29.41 while its takeover target Rio Tinto shed $7.11, or 8.21 per cent, to $79.49.
Commonwealth Bank was 93 cents lower at $40.07 after confirming it had a $170 million exposure to collapsed Allco Finance.
The other major banks were lower. ANZ was down 8.05 per cent to $17.47, NAB dropped 3.71 per cent to $24.94 and Westpac fell 2.27 per cent to $21.05.
Also today, childcare operator ABC Learning Centres went into receivership when its board appointed voluntary administrators.
Construction giant Leighton Holdings has maintained its guidance for a 15 per cent lift in annual profit, after making a good start to the 2008/09 financial year.
Leighton's shares shed 4.78 per cent to $27.28.
Developer and investor Mirvac Group has completed a $417 million institutional capital raising, with another $83 million to come through a retail offering.
Its shares soared on the news, up 32.82 per cent to $1.275.
Media giant News Corporation (the parent company of the publisher of news.com.au) downgraded its full-year outlook due to a weaker advertising market and the impact of the strengthening US dollar, after posting a drop in quarterly profit.
Ms Simpson said the company hit an 11-year low today, as News Corp shares fell 18.62 per cent to $12.94.
Other media stocks fell on the news, with Fairfax was down 9 cents to $1.98, Ten Network was down half a cent to $1.38 and Seven Network down 2.26 per cent to $5.62.
A lower oil price hampered energy stocks, as Woodside Petroleum lost 4.96 per cent to $42.77, Santos was down 54 cents, or 3.63 per cent to $14.35 and Oil Search retreated 1.41 per cent to $4.89.
Spot gold was trading in Sydney at $US736.55 an ounce at 1219 AEDT, down $US18.35 on Wednesday's close of $US754.90.
On the Sydney Futures Exchange, the December share price index futures contract was 154 points lower at 4211 on a volume of 16,525 contracts.
Shares tumble after Wall St rout
Fannie, Freddie rescue plans leave investors anxious
Markets are battered again
