MOODY'S downgrades of several European credit ratings and softer commodity prices dragged the local sharemarket almost 1 per cent lower yesterday.
The benchmark S&P/ASX200 index closed down 42.3 points, or 0.99 per cent, at 4242.8, while the broader All Ordinaries fell 40.5 points, or 0.93 per cent, to 4318.9.
All sectors finished lower, as investors digested the impact of the US ratings agency's downgrades, which included cuts for Italy, Spain and Portugal. Moody's also placed negative outlooks on France, Britain and Austria and said Europe's weakening economic prospects threatened the implementation of austerity programs and structural reforms needed for greater competitiveness.
"Jitters from Moody's comments trickled through our market in the absence of any large, significant, industrials reporting," the chief analyst at City Index, Peter Esho, said.
Copper and gold prices fell and lower natural-gas prices dragged market heavyweight BHP Billiton down. "[The price of gas] continues to slump, so that's weighing on the price of BHP," Mr Esho said.
The mining giant closed 49?, or 1.34 per cent, lower at $36.17, while Rio Tinto fell $1.15, or 1.63 per cent, to $69.28.
Oil major Woodside fell 41? to $35.17, while gold major Newcrest Mining dropped 70?, or 2 per cent, to $34.40.
Banks and financials stocks were also softer leading in to the Commonwealth Bank's first-half result, out today.
Mr Esho said CBA's result would be solid, based on strong margins, good retail deposit growth and bad debts that are in line with expectations. The market expects CBA to post interim cash earnings of $3.53 billion, roughly flat on the previous second-half result.
CBA shares fell 33? to $49.96, while Westpac led the sector lower, closing down 25? at $20.90.
Among the bright spots were News Corporation, which added 19? to $18.84, and Woolworths, which gained 28? to $24.99. Coca-Cola Amatil also closed up, rising 13? to $11.73.
In corporate news, building-fixtures supplier GWA Group posted a 60 per cent drop in first-half profits. Mr Esho said its stock was the worst performer, closing down 17?, or 6.85 per cent, at $2.31.
Gaming firm Tabcorp fell 15?, or 5.17 per cent, to $2.75 after announcing it hoped to raise about $200 million from the issue of new subordinated notes to be listed on the Australian Securities Exchange.
The national turnover was 1.9 billion securities worth $4.5 billion. The March share price index futures contract was 39 points lower at 4206.