The benchmark S&P/ASX 200 index was down 50.9 points or 1.05% to 4783.7, while the broader All Ordinaries dropped 52.2 points to 4892.

On Wall Street, the Dow Jones Industrial Average lost 12.64 points or 0.11% to 11,825.29 and the S&P 500 dropped 13.1 points or 1.01% to 1281.92.

Of the big miners, BHP Billiton was down A87c to $45.18, Rio Tinto shed $2.06 to $85.56, Fortescue Metals Group was down 53c to $6.66, OZ Minerals dropped 5.5c to $1.725 and Paladin Energy shed 10c to $5.47.

BHP revealed in its December quarterly report today that it is bracing for lower sales and production of coking coal plus higher unit costs at its Queensland operations until June, with the floods in the Bowen Basin leading to a 30% cut in quarterly production.

BHP’s total metallurgical coal production for the December quarter came in at 7.78 million tonnes.

It was a different story in iron ore though, with the major posting a fresh record in terms of production and shipments to annualised rates of 148Mt.

BHP produced 33.66Mt of iron ore in the latest three-month period, up 5% on the September quarter, and 65.64Mt for the December half.

Republic Gold was one of the biggest movers of the day with its shares up 20% or 3c to 12c on no news, as was Winchester Resources with its shares up 31% or 5c to 21c.

China, Australia’s largest trading partner, added to the pressure after revealing its economy expanded 10.3% in 2010, the fastest pace in three years, versus 9.2% in 2009.

For the December quarter, the country’s growth accelerated to 9.8% as industrial production and retail sales picked up, adding pressure on policymakers to keep raising interest rates.

“If the economy keeps growing at the current pace, inflation will remain alarming,”Bloomberg quoted Hong Kong-based ANZ economist Liu Li-Gang.

China’s foreign-exchange reserves jumped by a record $US199 billion in the fourth quarter and new loans breached the government’s target for 2010.

Spot gold was down $1.85 to $1368.075 per ounce at 4.23pm (AEDT).

Shares in Australia’s largest locally owned gold producer Newcrest Mining dropped A77c to $37.36 and AngloGold Ashanti shed 72c to $8.58, while Kingsgate reversed the trend, closing 6c higher on $10.40.

As for commodities traded on the London Metal Exchange, all were down overnight with lead sinking 3.5% to $US2562 per tonne, nickel losing $430 to $25,670/t, zinc falling 1.9% to $2374/t, copper dropping 1.3% to $9592/t, tin down $50 to $26,875/t and aluminium dropping $20 to $2430/t.

The Australian dollar was also weaker and was fetching US99.48c at the time of market close, down from $US1.0046 yesterday.