The biggest drop in more than a year on Wall Street triggered fresh turmoil in Asian markets today, amid heightened anxiety over the eurozone debt crisis and doubts over the strength of the US economy.
After government data showed the largest number of Americans lining up for unemployment insurance claims in five weeks, US shares plunged 3.60 percent with investors also gripped by deepening fears over Europe's debt.
Aussie market rebounds
The Australian share market rebounded at the close, sharply reversing a three per cent drop in earlier trade after claims that the Reserve Bank of Australia (RBA) had supported the Australian dollar.
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The benchmark S&P/ASX200 index closed down 11.1 points, or 0.26 per cent, at 4,305.4 points, after falling to a low of 4.175.7. The broader All Ordinaries index fell 16.6 points, or 0.38 per cent, to 4,325.8 points.
On the Sydney Futures Exchange at 1625 AEDT, the June share price index contract was 23 points lower at 4,293 on a volume of 59,834 contracts.
MS Global head of CFDs Anthony Anderson said the Australian dollar had been supported by the RBA after falling to 80 US cents on Thursday. It was trading at 83 US cents on Friday.
"Traders have taken a little bit of heart by seeing the Aussie supported by the RBA and rallying three cents today," Mr Anderson said.
"A lot of things are very, very oversold in the market, the banks in particular and BHP and Rio - 20 percent, 30 per cent in some of these stocks. "People are bottom picking, the market has made enough downside in the short term."
Asian markets plunge
Asian markets tumbled in response to the Wall Street fall, with Tokyo ending the morning 2.51 percent lower, while Sydney was one percent off after slumping 2.9 percent to a 10-month low earlier.
Seoul tumbled 1.83 percent while Singapore was 2.17 percent off and Taipei dropped 2.59 percent.
'Monster keeps coming back'
"This eurozone saga is turning into a bad horror movie," Phillip Securities economist Joshua Tan told Dow Jones Newswires. "You think the monster is dead but it keeps coming back."
The bearish US data and euro fears prompted fresh concern in Tokyo, with government officials fretting as investors piled into the safe-haven yen. A strong Japanese currency is a worry for Japan due to its negative impact on the repatriated profits of exporters who are currently driving the country's recovery from its deepest post-war recession.
US reform
By a 59-39 margin, senators approved an ambitious effort to curb Wall Street excesses blamed for fuelling the 2008 global economic meltdown, amid smouldering voter anger months before November mid-term elections.
The legislation, Obama's top domestic goal, must still be merged with the House of Representatives' rival version into a compromise measure before the final package can go to the president to sign into law.
Rein in 'high-risk practices'
House Financial Services Committee chair Barney Frank, a Democrat, told CNBC television that he foresaw smooth sailing and that "the president, I am certain now, will have signed this bill well before the Fourth of July."
The measure aims to rein in big firms' use of high-risk practices blamed for the collapse of 2008, to end taxpayer-funded bailout of financial titans previously deemed "too big to fail", and to create an unprecedented consumer protection agency to shield Americans from industry abuses.
It also aims to curb big banks' lucrative, largely unregulated business in complex securities called derivatives, essentially bets on the future cost of an asset, which many businesses use to control risk from volatile prices.
And it includes several measures aimed at increasing the transparency at the US Federal Reserve and the central bank's accountability.
'Won't stifle free market'
A few hours before the vote, after the Senate had cleared a key procedural hurdle, Obama had delivered a final legislative call to arms on the measure's behalf and a rebuke to critics who say it will smother the market.
"The reform I sign will not stifle the power of the free market - it will simply bring predictable, responsible, sensible rules into the marketplace," he said in the White House Rose Garden.
"Our goal is not to punish the banks, but to protect the larger economy and the American people from the kind of upheavals that we've seen in the past few years," the president said.
Obama also took aim at the financial industry, accusing it of deploying "hordes of lobbyists and millions of dollars in ads" to kill the bill and then trying to "water it down."
