Australia's sharemarket has closed the week suffering its biggest loss in more than a year, as the mood of investors worldwide soured amid renewed fears about global economic growth.
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The benchmark S&P/ASX 200 Index posted its sharpest daily drop since June last year, tumbling 2 per cent to 5188.3 points.
The sell-off extended the index's losses for the week to 2.4 per cent. It has plunged 7.8 per cent since the start of September.
The sharp falls followed a horror night on Wall Street in which the S&P 500 Index posted its biggest loss in six months after European Central Bank President Mario Draghi said there were signs the recovery was losing momentum.
That prompted the so-called fear gauge, the Chicago Board of Options Exchange Volatility Index, to surge as much as 28 per cent to 19.38, its highest level since February.
It made for a torrid local session, which was digesting China's announcement that it would levy import tariffs on coal for the first time in nearly a decade in an attempt to support its ailing domestic miners.
Whitehaven Coal was the hardest hit, shedding 8.8 per cent to $1.50, extending its losses for the week to 13.5 per cent.
Retail to coal conglomerate Wesfarmers also finished the week lower, easing 3.7 per cent to $40.83.
HSBC Australia and New Zealand chief economist Paul Bloxham said Beijing's tariff rise would likely wound the profitability of Australian coalminers, considering China was the world's top importer of coal.
He said it was the second piece of bad news to hit Australian coal producers in as many months, after China announced in September that it would ban certain types of highly polluting coal from next year, targeting low-grade imports from Indonesia and Australia.
"This is certainly not a positive story for Australia's coal producers," Mr Bloxham said.
"The coal sector had already been under pressure from falling coal prices and that had been squeezing margins. In some cases the prices have fallen below the cost of production, so this is not a helpful development.
"I suspect the fall that we have seen in market pricing for these coalminers reflects a genuine likely challenge to their profitability."
Energy stocks were also dragged into the selloff. Woodside Petroleum and Santos fell and 2.7 and 3.5 per cent to $38.70 and $12.59 respectively.
Together the two companies wiped almost 5 points off the S&P/ASX 200.
Base materials also weighed heavily on the index, with the sector ending the week down 3.3 per cent.
BHP Billiton took out 11.8 index points after it fell 2.7 per cent to $32.31, extending its losses for the week to 3.4 per cent.
Rival Rio Tinto finished the week down 3 per cent to $57.26.
The big banks extended their losses. Commonwealth Bank, the biggest company on the ASX, eased 2.4 per cent to $74.80 for the week. Westpac and ANZ closed 1 and 1.3 per cent lower to $32.25 and $31.22 respectively.
Meanwhile NAB dived 3.2 per cent to $31.92 for the week after it forecast on Thursday a 13 per cent fall in full-year cash profit after it announced $1.34 billion in write-downs, mainly from its British operations.
But Ross Barker, the boss of Australia's biggest listed investment fund, Australian Foundation Investment Company, was unfazed by the banks' dwindling share prices.
Mr Barker said the rally among the banks for much of this year "couldn't last forever".
"We were a bit wary of the banks with the prices that they were attracting in June and July," he said.
"They were pretty strongly supported by retail investors looking for yield."
Elsewhere, Telstra slumped 1.9 per cent for the week to $5.29, with investors appearing lukewarm to the company's $1 billion share buyback, which was completed on Monday.
