Australian stocks have taken their biggest fall since the "Shanghai shock" in February, following a big sell-off on Wall Street overnight.
The benchmark S&P/ASX 200 slumped 175.6 points to close at 6082.9 today. The All Ords dropped 174 points to close at 6127.
VIDEO: Dow down
However the market had regained some ground by noon, when it was down 125.7 points, or 2.01 percent, at 6,132.8 while the broader All Ordinaries Index was 128.8 points lower to 6,172.6.
Dealers said the market was following an overnight US plunge, in which the Dow Jones Industrial Average sank as much as 448 points before rallying to end with a loss of 311.50 points (2.26 percent) at 13,473.57.
Macquarie Bank's David Halliday said the fall, the second-biggest one-day drop for the year since the meltdown on Shanghai financial markets in February, came after the market had been trading at record highs for several months.
He said the fact that market had dropped 5.0 percent from the record highs set earlier this week had seen bargain hunters enter the market.
"So 5.0 percent is in some people's minds enough reason to start wading into the market and buying some shares and that's probably why we are seeing the market trade just off its lows at the moment," he told Sky News.
Eyes on Asia
Analyst Michael Heffernan said fears that the Australian market could experience a black Friday would depend on the performance of Asian stocks.
"It's sort of blackish, but it's black with a tinge of grey," he said.
"It's quite a fall in two trading sessions so it's quite likely that this might be as bad as it gets. It depends on whether the Asian markets fall out of bed."
Halliday said the major resource stocks could be the first to buck the downward trend.
"Despite all the concerns about the US sub-prime mortgage market, demand for materials and commodities out of China and India shouldn't be affected by this," he said.
Shortly after noon, Australia's index leader, mining giant BHP Billiton, had lost 1.13 dollars or 3.0 percent to 36.17 dollars, while rival Rio Tinto
was off 3.39 dollars or 3.6 percent at 90.49 dollars.
Banks were also down with National Australia Bank off 65 cents or 1.65 percent at 38.83 dollars and Commonwealth Bank 71 cents or 1.27 percent lower at 55.07 dollars.