THE sharemarket was down on renewed concerns Greece was heading towards default and a weak lead from Wall Street, while lower commodity prices weighed on mining stocks.
The benchmark S&P/ASX200 index closed 71.5 points, or 1.68 per cent, lower at 4181.9, while the broader All Ordinaries fell 70.2 points, or 1.62 per cent, to 4257.2. The March share price index futures contract was down 80 points at 4140.
IG Markets strategist Stan Shamu said investor sentiment turned negative after European Union officials remained reluctant to approve a second Greek bailout package worth ?130 billion ($159 billion).
Mr Shamu said there had been unconfirmed reports the second rescue deal could be pushed beyond March, with some suggesting there may be a bridging loan that would provide Greece with just enough funds to make a ?14.4 billion bond redemption on March 20.
Mining giant BHP Billiton fell 80?, or 2.22 per cent, to $35.30, Rio Tinto was down $1.59, or 2.31 per cent, at $67.28 and Fortescue Metals dropped 22?, or nearly 4 per cent, to $5.31.
The big four banks were all weaker, led by Westpac after it painted a bleak outlook for the economy and posted a weaker than expected $1.5 billion quarterly profit. Its shares shed 74?, or 3.53 per cent, to $20.22.
ANZ fell 50? to $21.20, National Australia Bank was down 42? at $22.63 and Commonwealth Bank retreated 38? to $49.85.
Qantas said it would cut routes, shed 500 jobs and defer aircraft orders after reporting a sharp decline in first half net profit. The shares jumped 9.5?, or 6 per cent, to $1.655 and was the best performing stock on the S&P/ASX 100 index.
The worst performer was breads and spreads maker Goodman Fielder, which reported a 77 per cent fall in first-half profit. The shares fell nearly 6 per cent to 48?.
Caltex has not ruled out shutting down its Australian oil refineries after writing down the value of its assets by $1.5 billion due to a high dollar and competition from Asia. Its shares eased 19? to $12.35.
Coles owner Wesfarmers reported a 0.3 per cent rise in first-half profit amid challenging short-term trading conditions. Wesfarmers shares dropped 76? to $29.09.
The spot gold price in Sydney was $US1720.80 an ounce, down $US6.65.
Preliminary market turnover was 2.02 billion shares traded worth $5.77 billion.