Wall Street leads shares into the red

The sharemarket closed more than 1 per cent lower yesterday, weighed down by financial stocks after setbacks on Wall Street overnight.

The ASX200 index was down 76.6 points, or 1.41 per cent, at 5,366.6, while the All Ordinaries fell 66 points, or 1.19 per cent, to 5,484.3.

A CMC Markets dealer, James Foulsham, said the market was "fragile" after a setback in US.

"We had some pretty weak leads from Wall Street and that's where the major moves come from," he said. "Most of the negative sentiment was in the financial sector."

The major banks were all hit, with ANZ down 83c at $18.68, Commonwealth Bank 74c at $39.90, NAB $1.08 at $26.51 and Westpac 92c at $21.08. St George lost $1.39 to $28.60.

The investment bank Macquarie Group gave up $3.55 to $48.75, while Babcock & Brown slipped 18c to $6.70.

Two of B&B's satellite funds improved after confirming their distribution guidance: Babcock & Brown Infrastructure rose 4c to 91c and Babcock & Brown Wind added 7c to $1.72.

But Babcock & Brown Communities, which holds retirement homes and aged care places, sank 7.5c to 37.5c after it cut its final distribution.

The big miners also went backwards despite better commodity prices overnight. BHP Billiton dipped 33c to $44.99, while takeover target Rio Tinto retreated $1.32 to $138.83.

Crude oil in the United States was $US2.67 higher at $US136.68 a barrel on Wednesday, as a threatened strike by Nigerian oil workers stoked supply concerns.

Local energy stocks benefited, with Oil Search up 12c to $6.28, Santos 54c to $21.75 and Woodside $1.75 to $65.50.

The spot price of gold in Sydney was $US893.10 an ounce, up $US7.35. The local goldminers were mixed, with Lihir up 7c to $3.09 and Newmont edging up 1c to $5.13, but Newcrest fell 44c to $27.88.

ABC Learning was back in the news after the Australian Competition and Consumer Commission launched proceedings alleging it had failed to comply with undertakings to divest two childcare centres. The shares slipped 7.5c to 71.5c.

Trading in Transurban was halted as it announced a capital raising of up to $998 million, a drastic cut to the fiscal 2009 distribution and a cost reduction program. Its shares last traded at $5.41.

Shares in Flight Centre fell 95c to $16.55 after the travel group clarified yesterday's upgraded earnings forecast, saying it did not expect to "materially exceed" the revised target.

Overnight, US stocks fell 1.1 per cent after Morgan Stanley posted worse than expected quarterly earnings and FedEx forecast a weak fiscal 2009.