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The Australian share market opened almot two per cent lower after Wall Street slumped on a rise in the number of jobless.
At 1015 AEST, the benchmark SP/ASX200 was down 70.1 points, or 1.81 per cent, at 3,807.2, while the broader All Ordinaries had lost 68.7 points, or 1.77 per cent, to 3,806.5 points.
On the Sydney Futures Exchange, the September share price index contract was 85 points lower at 3,776 on a volume of 6,485 contracts.
In the US, the prospects for a recovery from recession were undermined by data showing employers shed 467,000 jobs in June, pushing the unemployment rate to a fresh 26-year high of 9.5 per cent.
Analysts had expected a smaller number of 365,000 job losses, but a higher unemployment rate of 9.6 per cent.
Commodity prices fell on the weaker sentiment, sending local resources stocks lower.
BHP Billiton was down 95 cents, or 2.77 per cent, to $33.35.
Rio Tinto shares were in a trading halt at $51.75 as it sought subscribers for the remaining 5.24 per cent of new shares in its Australian rights issue.
Fortescue Metals was down 19 cents, or 5.18 per cent, to $3.48 and BlueScope Steel was eight cents lower, down 3.2 per cent, to $2.42.
Ahead of a long weekend, the Dow Jones Industrial Average lost 223.32 points, or 2.63 per cent, to settle at 8,280.74.
The Nasdaq fell 49.2 points, or 2.67 per cent, to 1,796.52 and the Standard Poor's 500 broad-market index fell 26.91 points, or 2.91 per cent, to settle at 896.42.
ABN AMRO Morgans Brisbane director of equities Bill Chatterton said all sectors were being sold off as a result of the weaker sentiment stemming from the US.
'The US really got a nasty knock, but we've handled it much better,' he said.
'Generally speaking, it's across the board. There aren't too many areas that are looking positive.'
The local market was likely to hold its current position or improve slightly through the day, Mr Chatterton said.
'I think we've probably seen the worst of it. Usually we respond to (bad news), and as the day goes on I'm not looking for a more dramatic negative performance.'
Energy stocks were lower after oil prices also plummeted overnight.
Light sweet crude for August delivery fell $US2.58 from Wednesday's closing price to $US66.73 per barrel.
Woodside lost 72 cents to $40.94, Santos fell 37 cents to $14.02 and Oil Search was seven cents lower at $5.38.
At 1037 AEST, the spot price of gold in Sydney was $US932.50 per fine ounce, down $US6.40 on Thursday's close of $US938.90.
Among the gold miners, Newcrest was down 51 cents to $30.69, Lihir Gold had lost six cents to $2.92 and Newmont was off 12 cents to $5.06.
Among the banks, Commonwealth Bank was down 44 cents to $36.98, ANZ had lost 13 cents to $16.00, National Australia Bank dropped 31 cents to $21.54 and Westpac fell 30 cents to $19.28.
Making news, metal recycler Sims Metal Management has bought US recycler Fairless Iron Metal for an undisclosed amount.
Sims Metal shares were down 61 cents, or 2.36 per cent, to $25.26.
Woodchipper Gunns has acquired a 17.9 per cent stake in Forest Enterprises Australia Ltd at ten cents per share.
Gunns had lost two cents to 96 cents, while Forest Enterprises rose one cent, or eight per cent, to 13.5 cents.
Among retailers, Wesfarmers fell 25 cents to $22.04, Woolworths was down 21 cents to $25.78 and David Jones was nine cents lower at $4.43.
Telstra shares were down four cents to $3.33 while Optus parent Singapore Telecommunications had lost three cents to $2.56.
The top-traded stock by volume was Forest Enterprises, with 72.3 million shares worth $7.3 million changing hands.
Overall turnover was 541.8 million shares worth $833.9 million, with 129 stocks up, 554 down and 214 unchanged.
