Banks suffer as nervous Nellies wipe off $38.5b

Nervous investors wiped $38.5 billion, or almost 3 per cent, from the value of the Australian sharemarket yesterday amid heavy selling, particularly of bank shares, over concerns about rising borrowing costs and growing evidence of a recession in the United States.
The ASX 200 index closed 166.3 points, or 2.98 per cent, lower at 5405.8 points, while the broader-based All Ordinaries index was down 164 to 5510.7.
The Commonwealth Bank was down $2.13, or 5.06 per cent, to $40.00, ANZ was down $1.07 to $20.93, Westpac was down 57c to $22.75 and NAB had lost $1.67, or 5.79 per cent, to $27.18.
CommSec chief equities economist Craig James said the Reserve Bank of Australia's expected 25-basis-points interest rate rise today had already been priced in.
Mr James said the local market was falling into line with other markets around the world yesterday, with falls across all Asian bourses excluding China.
"It has been taken out of our hands today and it doesn't matter how strong our economy is or what happens with interest rates and company news: it's all due to fears of a recession in the US," Mr James said. "This is a global market sell-off.
"Certainly, the banking sector is the hardest hit, which is surprising given bad loans are at record lows as a proportion of total loans.
"It reflects the fact that fear, rather than fundamentals, is driving the markets today."
He said pockets of joy in the local market included agriculture stocks such as ABB and AWB, up on higher grain prices, and the health-care sector, with CSL providing a haven amid the turmoil.
AWB shares were 5c higher to $2.40, ABB Grain was 8c stronger at $8.66 and CSL rose 55c to $37.05.
"Zinifex and Oxiana are dominating the action in the resources sector," Mr James said.
Oxiana agreed to a $6.2 billion merger with Zinifex to create the world's second largest zinc producer, ending months of speculation of a potential tie-up.
Zinifex's takeover offer for nickel miner Allegiance closes this Friday.
Zinifex finished up $1.02 or 9.16 per cent at $12.15 and Oxiana, which was the fourth-most traded stock yesterday, was down 7c to $3.90.
Allegiance shares closer half a cent lower at $1.10.
Takeover target Rio Tinto fell $5.35 to $131.65 and predator BHP Billiton lost 99c to $38.59.

As the gold price continued its climb to $US1000, Newcrest gained $1.51 to $39.55, Lihir lost 11c to $4.24 and Newmont lost 7c to $5.49. Sino Gold was up 32c to $8.02 on good volume.
Energy stocks were weaker. Oil Search fell 11c to $4.16, Santos shed 40c to $12.50 and Woodside dipped 25c to $56.75.
Rare earths hopeful Lynas Corp was the second-best performer on the day to Zinifex, closing 9c higher at $1.59.
Allco Finance Group executive chairman David Coe resigned from the company's board, along with executive directors Gordon Fell and David Turnbull, effective immediately.
Allco shares fell sharply, losing 25c, or 28.7 per cent, to 62c.
Media stocks were mostly lower. Fairfax was down 10c to $3.78, News Corp dipped 45c to $20.16, its non-voters 56c lower at $19.44, and Consolidated Media was steady at $4.34.
The retailers were weaker. Woolworths was 16c lower at $28.83, having traded as low as $28.13. Wesfarmers, the owner of Coles, lost 31c to $37.41, David Jones dropped 16c to $3.89 and Harvey Norman was down 18c to $4.37. JB Hi-Fi was off 57c at $10.06.
Agencies and staff
MONEY$A/US¢93.40-1.16
TWI70.8-1.0
90-day bank bills7.962 -0.028
3-yr bonds (Sep '09)6.6800-0.0400
10-yr bonds (Apr '15)6.2600-0.0300
YESTERDAY'S MOVES
Rises 225 Falls 1030Steady 298
Mar SPI as at 4pm 5408.0 -156.0
ASX 200 5405.8 -166.3
Financials 4949.6 -251.3
Industrials 5554.6 -123.1
Energy 14991.8 -264.7
Volume Value 1.447b 5.924b
WINNERS â–²
Zinifex +9.16%
Lynas Corp +6.00
Compass Resources +5.92
Sino Gold +4.16
Newcrest Mining +3.97
Origin Energy +3.16
Minara Resources +2.62
Sally Malay +2.60
Macquarie Media +2.36
AWB +2.13
LOSERS â–¼
Allco Finance -28.74%
City Pacific -21.63
APN/UKA European -12.50
Valad Property -11.35
Straits Resourcees -9.80
Macquarie Office -8.76
Asciano Group -8.25
Abacus Property -7.55
United Group -7.39
Arrow Energy -7.26