Market takes biggest plunge in 6 months
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Updated
The ASX 200 tumbled 3.4 per cent. (AFP: Greg Wood, file photo)
The Australian share market has had its worst day since January 22, when stocks fell 7 per cent.
The ASX 200 has tumbled 3.4 per cent to 4,971 and the All Ordinaries index fell 157 points to 5,031.
Although stocks were already set to fall after Wall Street's slump overnight, National Australia Bank's announcement has exacerbated the bad sentiment.
It has announced it is increasing its bad debt provisions from $181 million to just over $1 billion.
It blames deteriorating US housing market and the credit crisis for the latest write-off, and says its been based on a worst case scenario.
NAB shares have had their biggest fall in more than 20 years, losing 13.5 per cent to $26.56.
The other banks have fallen, dashing much of the gains that the financial sector had made this week.
ANZ was down 8.7 per cent, Commonwealth Bank lost 6.8 per cent and Westpac fell 3.1 per cent.
NAB's announcement prompted Westpac and ANZ to announce to the market that they will have no earnings impact from their exposure to collateralised debt obligfations (CDOs), while Commonwealth said it had no direct exposure to CDOs.
But the losses have not been limited to the banks.
BHP Billiton announced it is spending $625 million as part of a $1.4 billion gas and oil field project in Bass Strait, with Exxon Mobil subsidiary Esso.
Shares were down 1.7 per cent to $36.92.
US-exposed stocks have also suffered today, after figures released overnight showed sales of existing homes in the US fell to a 10-year low.
James Hardie was down 6.1 per cent to $4.65.
About 5:00pm AEST the Australian dollar was buying 95.79 US cents, 48.24 UK pence, 102.29 Japanese Yen and 60.97 Euro cents.
A barrel of West Texas crude oil was up nearly $US1 at $US124.62 and spot gold was also stronger, fetching $US932.80 an ounce.
