Australian stocks: Market at weakest level in six years

PERTH - The Australian share market closed at its weakest levels in almost six years, weighed down by banks and resources stocks following a drop in oil and base metals prices and a plus plunge on Wall Street overnight.

The benchmark S&P/ASX200 index was down 43 points, or 1.35 per cent, at 3,145.5, while the broader All Ordinaries index shed 37.1 points, or 1.18 per cent, to 3,111.7.

It was the S&P/ASX 200's weakest close since mid July 2003.

On the Sydney Futures Exchange at 1617 AEDT, the March share price index futures contract was 29 points lower at 3,140 on a volume of 21,733 contracts.

IG Markets head of institutional dealing Chris Weston said BHP Billiton, Commonwealth Bank and Telstra were among the most heavily traded stocks.

"Financials could not escape the bleak sentiment that was mustered up by their US counterparts ... following a possible Moody's credit downgrade on JPMorgan and Citigroup," Mr Weston said.

"Our domestic banks experienced a heavy sell-off."

Commonwealth Bank was down 33 cents at $27.00, Westpac eased nine cents to $15.70, National Australia Bank was three cents higher at $16.80 and ANZ retreated 29 cents to $12.36.

ANZ and Merrill Lynch have reached an in-principle $253 million settlement agreement with the liquidators of failed stockbroker Opes Prime and the corporate regulator.

Meanwhile, US shareholders of ANZ are mobilising as part of a class action alleging bank executives made false statements about the Opes Prime saga to inflate the bank's share price.

Mining giant BHP Billiton gave up 66 cents, or 2.33 per cent, to $27.65 while Rio Tinto was down five cents at $45.70.

Telstra, which went ex-dividend, dropped 13 cents, or 3.89 per cent, to $3.21 after chairman Donald McGauchie said economic conditions were worsening.

Insurer QBE was a poor performer, losing 76 cents, or 4.45 per cent, to $16.30.

Energy stocks were mixed. Santos gained 52 cents to $15.20, Woodside climbed $1.35 to $35.55 and Oil Search inched one cent lower to $4.81.

Gold stocks were mixed. Newcrest was down six cents at $31.07, Newmont added eight cents to $6.16, Lihir Gold rose 15 cents to $3.15 and Sino Gold appreciated nine cents to $5.07.

At 1622 AEDT, the spot price of gold in Sydney was US$934.60 per fine ounce, up US$21.50 on Thursday's local close of US$S913.10.

Making headlines on Friday, Standard & Poor's has removed Babcock & Brown from the All Ordinaries index, while Coca-Cola Amatil, Sonic Healthcare and JB Hi-Fi have moved up into large stock indices.

Shares in discount technology retailer JB Hi-Fi were down 48 cents, or 4.65 per cent, to $9.85 while Coca-Cola inched one cent lower to $8.48 and Sonic Healthcare added one cent to $10.41.

Babcock & Brown, which agreed to a debt restructuring and a revised business plan with its lenders last month, remains in a trading halt entered into in early January. Its shares last traded at 32.5 cents.

Among key retail stocks, Coles owner Wesfarmers was five cents stronger at $17.05, while rival Woolworths slipped one cent to $25.99.

The most traded stock by volume was Telstra, with 83.19 million shares worth $263.98 million changing hands.

Preliminary market turnover was 1.21 billion shares worth $3.28 billion, with 330 stocks up, 546 down and 267 unchanged.

- AAP