Australia shares fall sharply; QBE, ANZ lead decliners

SYDNEY: Australian stocks fell 2.6 percent on Thursday morning, with the big banks and miners losing ground on renewed fears of a US recession and concerns about the health of Europe's banks.

Global stocks were hammered overnight with new worries about European banks and a poor report on regional US manufacturing sending the Dow down 3.7 percent.

"You wouldn't have to be a fortune teller to know that our market was going to be down today after the bashing that the European and American markets got last night. There were no prisoners were taken on the markets," said Michael Heffernan, a senior client advisor and strategist Austock.

Insurer QBE led declines with a 9 percent fall while ANZ Bank shares fell 5.0 percent after its profit met expectations but warned that banks need to cap or cut costs amid global economic turmoil.

However, gold stocks bucked the trend after spot gold surged to a record high of $1,836 an ounce.

"One shining light is the gold sector, and in times of uncertainty there is a gravitation towards the precious metal, gold price hit a record last night over 1800 dollar an ounce." Heffernan added.

The benchmark S&P/ASX 200 index sank 112.3 points to 4138.9, at 0104 GMT after already falling 1.2 percent on Thursday.

New Zealand's benchmark NZX 50 index fell 0.9 percent to 3255.806 at 0104GMT.

STOCKS ON THE MOVE

Oil and gas firm Santos shares fell 3.4 percent to A$11.28 after more than doubling its first-half net profit following asset sales, and maintained its production guidance.

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Gold miner Newcrest outperformed the wider market slipping, rising 0.7 percent to A$38.90.

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Surferwear retailer Billabong plunged 20.9 percent after an 18 percent fall in annual profit and withdrew its earlier profit guidance due to tough market conditions.

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APN News and Media recovered slightly after a sharp fall on Thursday when its earning missed expectations. The stock was up 0.26 percent at 78 cents.

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Gaming group Tabcorp fell 9 percent after the stock went ex-dividend.

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Brewer Fosters fell 1.2 percent to A$4.94, only slightly ahead of a A4$.90 per share hostile takeover bid announced this week by SABMiller.

Copyright Reuters, 2011