The S&P/ASX 200 fell some 20 points within the first half hour of trading before beginning a steady decline to a close 1.8% lower than yesterday at 5011 points.

Basic materials was the worst performing sector, down 2.4% as the major miners set the pace for retreat.

BHP Billiton fell 2.1% to $A34.88 and Rio Tinto lost 2.2% to close at $58.57.

Analysts have connected Australian jitters to growing speculation the US Federal Reserve will cut its stimulus measures and the effect it is having on commodity prices.

“The market’s still fretting about what the Fed’s going to do with [quantitative easing],” Fat Prophets resource analyst David Lennox told Bloomberg.

“We’re starting to hear a crescendo of comments from officials.”

Spot gold reached its lowest level in two weeks today at $US1273.55. It was last trading at $1283.68.

Gold companies struggled, with Newcrest Mining losing 4.2% to $A11.28 and Beadell Resources closing 7.1% lower at 65c.

Yellow metal juniors posting notable losses also included Alloy Resources (down 25% at 0.6c), Arc Exploration (down 25% at 0.3c) and Excelsior Gold (down 20.9% at 8.7c).

Trading also coincided with a High Court dismissal of Fortescue Metals Group’s challenge against the Minerals Resource Rent Tax.

FMG investors responded by leaving the miner 4.8% down at $3.74 in a widespread sell-off among iron ore companies.

Ironclad Mining was among the hardest hit, down 17.9% to 11.5c, followed by significant losses by Centrex Metals, Atlas Iron and Mount Gibson Iron.

Precious metal and uranium explorer Marmota Energy, meanwhile, stood out with a 17.4% slide after it reported nickel grades as high as 1.4% at its Durkin prospect in South Australia.