Bourse on the slide as fears for economy grow

Australian shares closed at their lowest level for six weeks, dragged down by a dive in the iron ore price that hit the big miners.

Australian shares closed at their lowest level for six weeks, dragged down by a dive in the iron ore price that hit the big miners.

At the close on Thursday, the benchmark S&P/ASX200 index was down 44 points, or 0.88 per cent, at 4930.7, while the broader All Ordinaries fell 42.1 points, or 0.85 per cent, to 4917.1.

It was not the only bad news around: the Organisation for Economic Co-operation and Development downgraded Australia's economic prospects after the mining boom.

"We seem to be coming under a hell of a lot of pressure, with the OECD downgrades playing a part, [and] global growth as well as Chinese growth not looking so great," said CMC Markets trader Ben Taylor.

The big iron ore miners were all lower, after the price of the commodity fell to seven-month lows of $US112.90 a tonne. BHP Billiton fell 1.2 per cent to $34.46, Rio Tinto fell 1.4 per cent to $53.96 and the higher cost producer Fortescue Metals fell 5.1 per cent to $3.35.

Banking stocks were mixed, with NAB down after going ex-dividend, falling 4 per cent to $29.32. ANZ was 7¢ weaker at $27.53, Westpac rose 14¢ to $28.86 and the Commonwealth Bank rose 1.1 per cent to $67.61.

Seven Group shares were down 2.2 per cent at $7.43 after former Woodside boss Don Voelte was named as its new chief executive. He was previously in charge of Seven West Media, in which Seven Group holds a major stake.

Meanwhile, the dollar rose more than a cent higher, helped by a positive reaction to key business investment figures. Late on Thursday the dollar was trading at US96.73¢, up from US95.51¢ on Wednesday.

"The US dollar weakened against most major currencies, so that has helped the Aussie," said Commonwealth Bank currency strategist Peter Dragicevich.

The local currency also rose higher on capital expenditure data that showed business spending plans were holding up well for next year, even though there had been a drop in the March quarter.

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