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Wall Street points the way down for local bourse

THE Australian sharemarket fell more than 2.6 per cent yesterday to its lowest in more than two years, amid global uncertainty following big falls on Wall Street over a downgraded economic outlook.

THE Australian sharemarket fell more than 2.6 per cent yesterday to its lowest in more than two years, amid global uncertainty following big falls on Wall Street over a downgraded economic outlook.

At the close of trade the benchmark S&P/ASX200 index was down 106.9 points, or 2.63 per cent, at 3964.9, while the broader All Ordinaries index fell 108.9 points at 4044.7. It was the lowest close for both indices since July 2009.

Stocks on Wall Street fell sharply overnight after the US Federal Reserve announced expected measures to support the economy, but painted a grim economic picture.

The Dow Jones Industrial Average fell 283.82 points, or 2.49 per cent, to close at 11,124.84. An adviser at Intersuisse, Andrew Sekely, said events offshore had pulled the local market lower.

"We're following suit," Mr Sekely said. "As long as [the] news from overseas continues to be bad, it's unlikely that we'll see any recovery in local markets."

An RBS Morgans client adviser, Bill Bishop, said volatility in America had translated into a weak day on the local bourse.

"The lack of a cohesive policy in either Europe or America is driving this," Mr Bishop said. "Markets don't like uncertainty."

Shares in the miner Rio Tinto fell almost 7 per cent to $65.10, while BHP Billiton was down more than 4 per cent at $35.63.

The energy sector was also weaker, with Santos down 37?, or 3.2 per cent, at $11.12, while Woodside Petroleum fell $1.15, or 3.4 per cent, to close at $32.53.

One of the few bright spots on the market came from brewer Foster's, which said on Wednesday night its board would recommend a SABMiller takeover offer to shareholders.

Foster's shares closed up 37?, or 7.57 per cent, at $5.26. It was the highest traded stock by volume with almost 308 million shares traded.

Treasury Wine Estate, the wine business spun out of Foster's Group earlier this year, was up 11?, or 3.24 per cent, at $3.51.

Oroton shares rose 6.9 per cent to $7.67 after the luxury accessories retailer announced its annual profit had increased by 8 per cent and sales so far this fiscal year had exceeded expectations.

The price of gold closed at $US1770.60 per ounce, down nearly 10 per cent on the day.


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