KEY POINTS:
The Australian share market closed lower today following a downturn on Asian markets despite gains on Wall Street where investors were anticipating another interest rate cut by the US Federal Reserve.
On the local bourse, banking stocks led the way downwards but the big miners were firmer.
CMC Markets senior dealer James Foulsham said the local bourse had started off well but was pulled back when rumours circulated that there may be some more unwinding of margin positions in certain stocks in the financial sector.
Mr Foulsham said investors were nervous.
"We think there might be someone selling off, but we don't have any details," Mr Foulsham said.
"The way the market reacted today was just out of the blue."
At the 1615 AEDT close, the S&P/ASX200 index was down 97.8 points, or 1.71 per cent, to 5618.7, and the All Ordinaries dropped 89.2 points, or 1.55 per cent, to 5665.3.
On the Sydney Futures Exchange, the March share price index futures contract was 126 points lower at 5595 on a volume of 32,690 contracts, according to preliminary calculations.
Among the major banks, National Australia Bank fell A$1.74 to A$33.69, Commonwealth Bank surrendered A$2.71 to A$49.00, Westpac backtracked 65 cents to A$25.60 and ANZ dumped 46 cents to A$25.99.
On Wall Street overnight, the Dow Jones industrial average rose 96.41 points to 12,480.30 as expectations of another Federal Reserve interest rate cut to shore up the economy fuelled a further recovery in shares of banks, insurers and home builders.
In the resources sector, global miner BHP Billiton added 41 cents to A$36.11, Rio Tinto improved 77 cents to A$114.34, and Alumina jumped 21 cents to A$5.50.
Takeover target Herald Resources lifted eight cents to A$2.58 as it withdrew a previous recommendation for a A$444.8 million takeover bid in favour of a A$504.80 million joint bid by an Indonesian and a Chinese firm.
Oil and gas producer Woodside Petroleum dipped 10 cents to A$45.75, and Santos sagged 27 cents to A$11.91.
Retailing giant Woolworths descended A$1.30 to A$29.50 after lifting first half sales by almost nine per cent, which Mr Foulsham said missed market expectations.
Wesfarmers, which owns Coles, gave away A$1.88 to A$34.75.
In the gold sector, Lihir Gold scraped off one cent to A$3.75 despite lifting annual gold production by 7.7 per cent to a new record and forecasting a further increase in the current year.
Newmont shed three cents to A$6.11, but Newcrest added A$1.25 to A$35.00.
The price of gold in Sydney at 1631 AEDT was US$920.60 per fine ounce, down US$6.90 on yesterday's close of US$927.50.
Among media stocks, Consolidated Media Holdings was 12 cents richer at A$4.45 but Fairfax weakened five cents to A$4.00.
News Corp was up five cents at A$21.95, while its non-voting stock put on 14 cents at A$21.37.
Telco Telstra was down 13 cents at A$4.34 and its instalment receipts were 11 cents lighter at A$2.80. Optus-owner Singapore Telecommunications gave away six cents to A$2.87.
Among other stocks, industrial brands company Alesco Corporation rose 40 cents to A$9.65 as it booked a 16.7 per cent lift in first half profit.
Global transport services provider Brambles gained nine cents at A$10.29 as it appointed new management for its international business, including the president of Ford Australia, Tom Gorman.
Mining equipment rental group Emeco Holdings fell 23 cents to 71 cents as it issued profit guidance for the first half of 2008 lower than that in the prior corresponding period, on the back of disappointing earnings.
Biodiesel company Jatoil finished its first day on the exchange at 13.5 cents compared to its issue price of 20 cents per share.
The top-traded stock by volume was drug developer PharmaNet Group, with 97.49 million shares worth A$1.43 million changing hands. PharmaNet was up 0.5 cents at 1.4 cents.
Preliminary national turnover was 1.61 billion shares worth A$6.48 billion, with 756 stocks down, 488 up and 313 unchanged.
