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The Australian stock market plunged 3.5 per cent today, wiping $53 billion from the value of stocks in the biggest one-fall in four months.
The big drop followed an earnings downgrade by Centro Property Group, which caused carnage among local property trusts.
The day had already got off to a bad start after high inflation figures in the US dimmed hopes of rate cut there, prompting a big fall on Wall Street.
Centro, which is Australia's second biggest owner of shopping centres, tumbled over 75 per cent after higher funding costs triggered by the US sub-prime mortgage crisis forced it to slash its distribution guidance.
At the 1615 AEDT close, the benchmark S&P/ASX200 index was down points, or 3.52 per cent, to 6263.5.
The All Ordinaries shed 224.3 points to 6331.8 equating to a single day loss of about $53 billion from the value of stocks in the index.
On the Sydney Futures Exchange, the December share price index contract dropped 233 points to 6268 on a volume of 70, 611 contracts, according to preliminary figures.
Today's fall on the Australian share market was the biggest since August 10, when the S&P/ASX200 index fell 229.6 points, or 3.72 per cent, to 5936.
Centro today dropped $4.34, or 76.14 per cent, to $1.36.
Nomura Australia equity markets specialist Eric Betts said the news from Centro was probably worse than people expected.
"Property trusts are down 11 per cent, the biggest one-day fall as far I can remember," Mr Betts said.
"In recent years, all the property trusts, to an extent, followed a similar path of expanding overseas and also increasing their gearing.
"They will have various debt maturity profiles, but when they have to refinance their costs will go up."
The local market had already opened one per cent lower this morning after the Dow fell 1.32 per cent on Friday.