SYDNEY: Australian stocks slumped 3.72 percent on Monday as fears over the European debt crisis and global growth continued to weigh on sentiment.
At the close, the benchmark S&P/ASX 200 was 156.2 points lower at 4,038.5, following a negative lead from US stocks.
The Australian dollar was also sharply weaker at 103.40 US cents late in the session after risk aversion among traders spiked on rumours of a Greek default.
It closed on Friday at 106.28 US cents.
Commsec analyst Steven Daghlian said the sell-off reflected concerns about Greece potentially defaulting on its massive debt.
"Banks were not exempt from the sell-off, due in part to the US and European region, especially out of Greece, with concerns of a potential default. That didn't do anything to help banks across the globe," he said.
"So at the moment, there's a lot of fear in the markets and that's hurting all areas."
IG Markets strategist Ben Potter agreed that investor confidence had been eroded.
"No one really has any idea where this whole situation may end up. It's the threat of contagion that is causing the greatest concern," he said.
"Everyone remembers the early stages of the global financial crisis, where everyone was saying it was contained and there was no chance of it spreading. How wrong they were."
Among major Australian companies, BHP fell 3.85 percent while Commonwealth Bank of Australia lost more than four percent, as did Westpac Bank.
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