The Australian share market ended the day deeply in the red at a two-month low as finance stocks lost the most ground amid widespread selling.
The benchmark S&P/ASX200 index fell 89.2 points, or 1.88 per cent, to 4,643, while the broader All Ordinaries index was down 84.8 points, or 1.76 per cent, at 4,722.9.
Both indices opened around one per cent lower on Monday. It was the biggest one-day percentage fall since March 15, when the bourse lost 2.1 per cent. On the ASX 24, the June share price index futures contract was off 91 points at 4648, with 33,765 contracts traded.
Local shares got a weak lead from Wall Street over the weekend where investors sold off stocks because of lower earnings forecasts from US companies.
Concerns about European sovereign debt worsened after Fitch Ratings cut Greece's credit ratings by three notches to B-plus, and Standard & Poor's lowered Italy's credit rating outlook from stable to negative.
"Clearly it is a continuation of the soft performance on overseas markets due to uncertainty in Europe, with the Greek situation, and the softness in the American share market," Austock Securities senior client adviser Michael Heffernan said.
Bank stocks bore the brunt of the investor concerns, with three of the four major banks the worst performers in the S&P ASX20.
National Australia Bank wiped off 75 cents, or 2.74 per cent, to $26.66, Westpac was down 68 cents, or 2.99 per cent, at $22.07 and ANZ lost 77 cents, or 3.38 per cent, to $22.02. Commonwealth Bank lost 75 cents or 1.44 per cent to $51.42.
Among other financials, QBE Insurance was down 38 cents, or 2.1 per cent, at $17.69, Macquarie Group shed 69 cents, or 1.98 per cent, to $34.16 and AMP lost 10 cents, or 1.9 per cent, to $5.17.
Resources stocks were also lower, with the largest falls among the major miners. BHP Billiton lost 76 cents, or 1.73 per cent, to $43.29 and Rio Tinto fell $1.21, or 1.51 per cent, to $78.99.
Metals-exposed stocks were some of the worst performers among the top 100 companies.
Lynas Corporation was the worst performer among the top 100, down 14 cents, or 6.11 per cent, to $2.15, BlueScope Steel was down six cents, or 4.15 per cent, at $1.385 and Sims Metal Management was down 56 cents, or 3.2 per cent, at $16.92.
Gold stocks lost ground, with Newcrest giving up 42 cents to $38.05 and Kingsgate Consolidated down eight cents at $7.65.
The spot price of gold in Sydney closed at $US1506.83 per fine ounce, up $US8.93 from Friday's close of $US1497.90. In news on Monday, Agribusiness Elders lost 4.5 cents, or 9.09 per cent, to 45 cents after it lowered its forecasts for full year underlying profit, after posting a $14.6 million first half loss.
The top traded stock was Republic Gold, with 227.37 million shares changing hands for $1.37 million. Its shares were up 0.1 of a cent to 0.5 cents, after the company released results of drilling at its Amayapampa project in Bolivia.
National turnover was 2.34 billion shares worth $4.868 billion, with 298 stocks up, 831 down and 370 unchanged.
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