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Australian stocks tumble 2.7 percent in wake of declines on Wall Street, Shanghai

Australian stocks tumble 2.7 percent in wake of declines on Wall Street, Shanghai

Australia's benchmark stock index plunged 2.7 percent Wednesday in the wake of sharp declines in the Chinese and U.S. stock markets the previous day and amid jitters about slower global growth.
The S&P/ASX200 index ended 161.3 points lower to 5,832.50. The market earlier shed 3.45 percent to a four-week low of 5,786.8, before recouping some of those losses in midday trading. But the market ended well below its record high of 6,052.1 set Friday.
Investors were bearish after Chinese stocks sank nearly 9 percent Tuesday, which in turn triggered a 3.3 percent drop in the Dow Jones Industrial Average.
Brokers said the volatility could spur more selloffs, but predicted the downturn would be short-lived.
Michael Heffernan, a senior client adviser with Austock Brokers, said he expected the Australian bourse to rise 10 percent over the year.
"We'll have our ups and we'll have our downs," he said. "But fundamentally, the economy is in great shape and that puts a concrete floor under the performance of our market."
Australian leaders agreed, with Treasurer Peter Costello warning Tuesday's slide in global equity markets could trigger instability "for some time."
But his overall assessment of China's economy was positive, telling reporters the Asian giant would continue to grow, albeit "in fits and starts."
Prime Minister John Howard said Tuesday's tumble was not surprising, and urged investors not to panic.
"When an economy is growing as strongly as China's economy is growing, from time to time there will be corrections, but the fundamentals of that economy are very strong," Howard told Sky News television.
Falls in the Australian markets were broad-based, with Australia's mining companies among the hardest hit. Anglo-Australian miner BHP Billiton dropped 6 percent to A$27.13 while rival Rio Tinto shed 5 percent to A$75.60. Both companies have surged in recent months on the back of China's surging demand for resources.
Among Australia's big four banks, investment giant Macquarie Bank was the biggest loser, dropping 6.5 percent to A$78.99.
Retail giant Woolworths provided a rare bright spot, rising 1.7 percent to A$27.20, a day after releasing a bumper half-yearly profit result.