ASX | Share Market | Stocks set to plunge as worries hit

The Australian sharemarket looks set to fall sharply this morning, with key indicators pointing to a broad-based fall in the order of 2.5 per cent.

The SPI 200 Futures - the measure of forward-looking sentiment - were down 115 points - 2.5 per cent - to 4477 after worries on Wall Street sent US stocks into a tailspin .

The local S&P/ASX 200 index, which contains the nation's biggest 200 listed companies, closed yesterday at 4621.6 points, more than 300 points lower than where it was just a few weeks ago.

The Australian dollar - considered a risky asset - also dived to below 87 US cents overnight as investors fled to safe-heaven investments.

In offshore trade, the main gauges of the performance of US stocks' performance skidded as poor corporate earnings, renewed worries about debts in European nations including SPAin and Portugal and economic data that showed an increase in the number of people claiming jobless benefits .

By mid-afternoon US time, the Dow Jones industrials average, which contains the biggest US companies, had shed 205.34 points to 10,065.21, the broader S&P500 was off 25.53 points at 1071.75 and the technology-heavy had dipped 50.71 points to 2140.20.

That came as the data revealed the number of US workers filing for jobless benefits unexpectedly rose last week, putting a dampener on expectations the world's largest economy is in recovery.

And there are continuing concerns about ballooning public debt in Greece and Portugal , which have SPArked a fresh round of global credit markets jitters.

The market for credit default swaps - which gauge the risk of default by a company or government - suggest that investors are increasingly anxious about lending on global markets.

That concern was one of the factors that propelled a fall in European shares, with the main measures in London, Germany and France all down by at least 2.17 per cent.

Commodity prices also fell to their lowest levels in about four months, with oil alone shedding 5 per cent overnight

Gold had its worst day since late 2008, dropping about 4.4 per cent.

BusinessDay