Stocks tumble as banks, miners lose ground

The sharemarket finished sharply lower on Thursday as investors took profits on banks, and resources, hit by another drop in iron ore prices, continued their poor run.

The benchmark S&P/ASX 200 Index dropped 60.2 points, or 1.2 per cent, to 5032.2, while the All Ordinaries lost 60.6 points, or 1.2 per cent, to 5043.8.

The two biggest drags on the market were material and financial stocks, down 2.2 per cent and 1.1 per cent respectively.

"The materials sector has been a big underperformer and that's clearly related to the peaking and slowing down of the mining investment boom," said division director at Macquarie Private Wealth Martin Lakos.

BHP fell 2.3 per cent to $35.09, while rival Rio Tinto also dipped 2.3 per cent to $60.70. Fortescue Metals lost 6.1 per cent to $3.97.

Doing no favours for the miners, iron ore fell to a new low for 2013 of $US139 a tonne. It is predicted to continue to fall to around $US120.

Mr Lakos remained positive about resources, saying miners stand to benefit from a more stable iron ore price. With costs in the $US45-$US55 a tonne range, the industry, with the ability to deliver higher volumes and less cost associated with infrastructure, had the potential for more profit, he said.

Westpac led losses among banks, falling 1.2 per cent to $30.13, while ANZ slid 1.1 per cent to $28.18. Commonwealth Bank and NAB both dropped a little under 1 per cent, to $68.88 and $30.69.

The financial sector had been overstretched, so it was no surprise that share prices had eased, Mr Lakos said .

"Given that we've got five or six weeks to go before banks report, I think there's probably limited downside at the moment," he said.

Myer shares surged 5.5 per cent to $3.07 after reporting a better than expected half-year profit of $88 million. Since record lows in June last year, Myer shares have rebounded nearly 100 per cent, but are still well below their 2009 IPO level of $4.10.

The dollar rose almost a full cent to US103.70¢ in late trading, after the unemployment rate remained flat at 5.4 per cent and 71,500 jobs were added to the economy.

ANZ economist Justin Fabo said that despite the headline number there were worrying factors. "In trend terms, full-time employment fell 2000 in the month, not a sign of a strong labour market," he said.