Aust stocks close lower

Weak US home sales data, tapering worries weigh on local market despite survey showing a lift in business conditions.

The Australian stock market has closed more than 1.2% lower after tapering worries and weaker than expected United States home sales data weighed on Wall Street.

At the 1615 AEDT official market close, the benchmark S&P/ASX200 index dropped 1.26% to 5,175.1 points, while the All Ordinaries index shed 1.26% to 5,188 points.

The benchmark index opened 1.47% lower, then narrowed morning losses as the local market found there were no negative signals for the Wall Street session tomorrow.

Investors around the world are nervously awaiting the US central bank's Federal Open Market Committee meeting this week, where the bank is expected to again reduce its stimulus program, while a seven per cent drop in new home sales in the US was worse than expectations and weighed on the markets.

IG analyst Chris Weston said emerging market currencies have stabilised following concerns of an emerging market collapse.

"The ASX 200 has found some solace in the moves offshore and has picked up from the low of 5,158," Mr Weston said

Locally, a National Australia Bank Ltd survey this morning showed business conditions are at the highest level in two and a half years, due to lower interest rates and the falling Australian dollar, while business confidence holds steady.

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