The sharemarket slipped back for the second week in a row - the first consecutive weekly loss this year.
The Cypriot banking crisis dominated the first half of the week. Political events in Canberra consumed the second.
For the week, the benchmark S&P/ASX 200 Index dumped 152.9 points, or 3 per cent, to 4967.3, while the broader All Ordinaries index fell 148.5 points, or 2.9 per cent, to 4980.8.
Investors were rattled on Monday when Cyprus grabbed international headlines after it was revealed that European officials planned to charge a levy on Cypriot deposit holders to help the country pay for a €10 billion bailout.
Some market watchers were confused at the fallout, believing Cyprus too small to worry about.
It led to a rout of global markets on Monday, with the local and US markets shedding about 2 per cent.
The issue has refused to go away and analysts were warning that things could worsen after Cyprus failed to get agreement with Russia on a rescue loan.
"Longer term, there maybe meaningful consequences arising from the manner in which Europe has attempted to deal with the Cyprus issue," JP Morgan strategist Sally Auld said. "For markets, we suspect that investors may need to adjust expectations towards a longer more difficult journey in Europe."
On Thursday, political events in Canberra bedazzled voters when Labor stalwart Simon Crean called for a leadership spill of the Labor government.
It was another bizarre chapter in Labor Party history and the fallout continued on Friday when key members of the government's frontbench - who were also supporters of Kevin Rudd - retired to the backbench.
In financial market jargon, the event meant Australia's "political risk" increased dramatically. But that was not reflected in the sharemarket, with stocks climbing slightly on Friday with help from gains for the major banks.
The Reserve Bank released minutes from its recent monetary policy meeting this week.
Economists said the minutes suggested we could be near the bottom of the RBA's rate-cutting cycle.
For the week, Billabong International shares gained 5.5¢, or 7.9 per cent, to 75¢, after the troubled surfwear retailer confirmed takeover talks were continuing.
Billabong shares had plunged 20 per cent on Thursday before the company requested a trading halt to investigate the sudden sell-off.
David Jones slipped 5¢, or 1.6 per cent, at $3.02, after Australian supermodel Miranda Kerr severed her association with the retailer.
Leighton Holdings slipped $1.50, or 6.9 per cent, at $20.20, as three board members at the construction company stood down after a breakdown in relations with its major shareholder.
A shake-up of its board had been a long-time coming amid pressure from its major shareholder Hochtief, analysts said.