The benchmark S&P-ASX 200 index fell to a three-year low of 4269.9 points before bouncing to close the session 1.5% lower at 4320.9 points, while the boarder All Ordinaries fell 1.8% to 4291.3 points.
On Wall Street, the Dow Jones Industrial Average fell 189.01 points, or 2%, to 9258.1 points overnight.
In the United Kingdom, the government announced a $A121.4 billion package to part-nationalise eight of the nation’s major banks in a bid to restore confidence in the banking sector.
However, despite the rescue package, the FTSE 100 closed the day down 5.2% to 4366.7 points.
The major miners closed lower with BHP Billiton falling 6c to $29.84, while Rio Tinto closed down $3.11 to $78.01.
Shares in iron ore play Mount Gibson Iron plummeted to an 18-month low of 79c after announcing a number of Chinese customers had requested the company delay its hematite ore shipments scheduled for the second quarter of fiscal 2009.
“Customer and iron ore sector analysis indicates a slowdown in demand for iron ore in China due to current economic uncertainty and the tightening of credit facilities, leading to reductions in steel production and the current significant build-up of iron ore stockpiles at Chinese ports,” the company said in a statement.
The Perth-based iron ore play recovered to close at 87.5c, down 28c (24%).
The majority of iron ore miners also lost ground today with Fortescue Metals Group shedding 32c to $3.30, Portman down 1c to $21.10 while Aquila Resources shed 60c to $4.00, Murchison Metals fell 9c to 88c and Atlas Iron dropped 16c to $1.10.
Global commodities were hit hard overnight with London Metal Exchange three-month traded copper falling 7% to $US5240 per tonne, zinc falling 7.7% to $1430/t and nickel falling 7% to $13,200/t.
Gold stocks on the Final Call watchlist rallied today with Newcrest Mining closing up $3.50 to $26.70, Lihir Gold up 28c to $2.64 and Newmont Mining up 70c to $5.20.
Spot gold was trading $US1.40 higher at $906.7 an ounce at 4.10pm.
Meantime the International Monetary Fund, in its latest World Economic Outlook, said global growth would slow dramatically in the final months of 2008, and growth in advanced countries would be close to zero until at least mid-2009.
Global growth was at 5% in 2007 and has slowed to 3.9% in 2008 with the IMF predicting global growth to slow to around 3% for 2009.
Growth in advanced countries is expected to be just 0.5%, while growth in developing countries is expected to be 6.1% in 2009, down from 6.9% this year and 8% in 2007.
