Australia shares cut losses, off 1.9pc

The Australian market is down more than 20 percent from its recent peak in April, which is the usual definition of a bear market, with investors ignoring Australia's relatively resilient economy.

The benchmark S&P/ASX 200 index was off 77.1 points to 3,908.9 as of 0348 GMT, having plumbed as low as 3,765. It has already slumped 11 percent over the past week.

New Zealand's benchmark NZX 50 index slid 3.8 percent to 3,063.9, touching 11-month lows.

Top miners BHP Billiton and Rio Tinto were down 1.8 percent and 2.8 percent respectively, well off earlier lows.

Farm chemicals maker Nufarm was hammered 14.4 percent to A$3.28, its lowest since 2002, on worries it will have trouble refinancing debt in the current market.

The company had no immediate comment.

Leighton Holdings slid 5.9 percent to a 2-1/2-year low of A$17.15 after saying it planned to sell its HWE contract mining arm to BHP Billiton , its biggest customer, for $727 million.

The move by BHP to take mining operations in-house knocked the wind out of smaller mining services firms. NRW Holdings was the market's biggest loser, slumping 12 percent, while Bradken and Monadelphous both plunged nearly 9 percent.

Macmahon Holdings and Sedgman , mining contractors in which Leighton holds strategic stakes, fell 8 percent and 10 percent respectively.

National Australia Bank fell 4.3 percent after meeting forecasts for a 27 percent rise in third-quarter cash profit. Investors were disappointed that it gave no outlook for growth or funding costs amid the global markets sell-off.

Coca-Cola Amatil , valued as a defensive holding, was not immune to the market's drop. It fell 3.6 percent after warning that conditions remain uncertain in a soft consumer environment.

Bionic ear maker Cochlear held up better than the market, falling 1.6 percent to A$64.95, after meeting market forecasts for its full year profit.

Copyright Reuters, 2011