Aussie shares fell, led by a plunge in Rio Tinto shares after BHP Billiton's decision to drop its $100 billion-plus takeover bid. Banks also retreated as investor worries about the economy returned.
The benchmark S&P/ASX200 index ended the day down 2.3%, or 83.4 points, at 3540. The broader All Ordinaries index was down 2.7%, or 95.8 points, at 3479.6.
Rio Tinto's shares dived 34%, or $21.89 to $42.01, pacing a similar collapse in London trading overnight. BHP also followed its London-traded shares higher in local trading, ending the day up $1.03, or 3.9%, at $27.25.
Across the region, Asian stocks were mixed this afternoon - the Nikkei 225 was down 1.6%, or 130.65 points, at 8193.28, while the Hang Seng was up 3.4%, or 439.74 points, at 13,318.34.
Seismic shift
The seismic shifts by the two miners initially canceled each other out, but at the end of the day, Rio's slump subtracted 30 points from the main index, while BHP
added about 17 points.
IG Markets research analyst Ben Potter said the market had drifted throughout the day, with sellers selling into any signs of strength.
"The BHP-Rio issue is an absolute mess for anyone who holds Rio Tinto,'' Mr Potter said. "There has been a few big margin calls go out for that today.''
"I think there is going to be an overhang of stock being sold for Rio Tinto over the next couple of days.''
Market talk was that Rio would have to raise capital as well, Mr Potter said.
BHP Billiton CEO Marius Kloppers blamed "recent global events and associated falls in commodity prices" for altering the "risk dimensions" on mining group's now-abandoned bid for Rio Tinto.
Shares of smaller rival Fortescue Metals were hit as investors bet iron-ore prices may be weaker after BHP dumped its bid. The company's shares were down 33 cents, or 16%, at $1.72.
Banks lower
Financial stocks were a major drag on the market, with the sub-index down 2.4% at the close. Telecoms was the only sector to rise, up 1.3%, thanks largely to Telstra.
The big banks were all lower, led by the Commonwealth Bank, which fell $1.34, or 3.9%, to $32.66, and ANZ, which was down 50 cents, or 3.4%, to $14.05.
NAB fell 30 cents, or 1.5%, to $19.57 and Westpac sank $1.23, or 6.9%, to $16.60. Continued…
