plunging resources lead $40bn rout

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    RESOURCE and energy stocks — until recently the darlings of Australian investors — have led the downward spiral that has consumed the sharemarket over the past two days.

    The market has shed $40 billion of value in two trading days in the steepest two-day fall since 2001, when it fell in the immediate aftermath of the September 11 terrorist attacks.

    Private investors are bearing the brunt of the downturn. Bell Potter's head of wealth management, Heather Zampatti, said retail investors, the mums and dads of the investment community, tended to be highly leveraged towards resource stocks.

    "A lot of the rise we've seen in the last quarter — and we've had a very strong quarter — was led by the resources. So they are certainly the ones that have led the fall," Ms Zampatti said.

    BHP Billiton, the world's biggest miner, was among the worst hit on the Australian market. BHP lost 69¢ or 3.22 per cent to close at $20.76.

    Rio Tinto fell 80¢ to $56.30, Alumina dipped 21¢ to $5.70 and Zinifex slipped 16¢ to $4.18.

    The broader market followed, with the benchmark S&P/ASX 200 Index dropping 96.2 points or 2.12 per cent to 4447.3 after shedding 100.1 points on Wednesday.

    And continued hard times may be ahead. On the Sydney Futures Exchange, the December share price index contract plunged 126 points to 4429.

    "The pullback is entirely appropriate and long overdue," said Troy Angus, who helps manage about $32 billion at BT Financial Group in Sydney. "There will be more selling to come because we're not seeing any compelling valuation support for shares yet."

    Shaw Stockbroking dealer Jamie Spiteri said yesterday's trading was almost a mirror image of Wednesday's, with stocks that had posted the strongest gains in recent weeks the worst hit.

    "But no area of the market has been spared," he said.

    "The banks have been a little bit more resilient than the growth areas of the market but there is across-the-board profit-taking in the stocks that have run the hardest in recent times."

    But on a day like yesterday, resilient is a relative term. All the Big Four banks were down sharply. National Australia Bank fell 46¢ to $32.30, ANZ sagged 23¢ to $23.22, Commonwealth Bank lost 28¢ to $38.04 and Westpac lost 12¢ to $20.75.

    Investment banks, which have done well this year as the market leapt from one record high to another, fell on sentiment that this week's downward correction was well deserved. Macquarie Bank lost $3.19 to $69 and Babcock & Brown Ltd fell $1.05 to $16.51.

    A softer oil price helped send oil and gas stocks plummeting, with Woodside Petroleum down $1.51 to $32.00, Santos sliding 50¢ to $11.83 and Oil Search diving 26¢ or 7.05 per cent to $3.43.

    Telstra's brief rally seems to have ended, with the telco down 8¢ to $4.07. Singapore Telecommunications bucked the trend and added 1¢ to close at $1.905.

    Qantas slid 5¢ to $3.32 as the airline held talks with aircraft maker Boeing about the new generation 787 Dreamliner wide-bodied jet.

    Media stocks were not spared on the day, with Publishing and Broadcasting Ltd down 16¢ to $16.17, Fairfax dropping 12¢ to $4.46 and the voting stock in Rupert Murdoch's News Corp falling 21¢ to $20.74 while the non-voting stock eased 7¢ to $19.88.

    Retail stocks all tanked, with Woolworths plunging 37¢ to $15.86, supermarket rival Coles Myer falling 15¢ to $9.96 and David Jones slipping 5¢ to $2.34.

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