The benchmark S&P/ASX200 index was down 128 points or 3% to 4217.7 at 12.00 AEST, while the Australian dollar also fell to $US1.01c.
AMP shares lost 2.43% to $4.21, while Commonwealth Bank shares lost 2.86% to $48.53. Westpac lost 3.76% to $20.75, as NAB fell 5.12% to $24.44.
In the United States, the Dow Jones Industrial Average lost a shocking 389 points or 3.2% to 11,780.9.
Unemployment steady at 5.2%
The unemployment rate remained flat in October at 5.2%, according to the latest figures from the Australian Bureau of Statistics.
The figures show 20,000 full-time jobs were added during the month, while the actual number of jobs grew by 10,100 to 11.4 million.
The rise in full-time employment was offset by a decline in part-time employment. Analysts had largely expected a rise of 10,000 jobs.
Fairfax trading conditions still poor, company confirms
Fairfax chief executive Greg Hywood has confirmed trading conditions haven't improved since full-year results were delivered in August.
Hywood told shareholders at the company's AGM that the company is still hurting due to the weak advertising market, along with volatile market activity due to Europe's debt problems.
"During the first four months of this financial year, we have seen a continuation of the trading that we reported in August, with revenues a little more than 4% below the previous corresponding period," he said in a statement.
"In Australia and New Zealand, consumer confidence levels remain subdued with consequential impact on most advertising categories but particularly retail and residential real estate."
Asciano shuns guidance, cites poor economic conditions
Rail operator Asciano has said that although the company has performed well considering the economic conditions, it will still be affected by a downturn.
Chief executive John Mullen said economic conditions are difficult to predict.
"While Australia is better placed than many countries, activity levels remain inextricably linked to global influences," he said in a statement.
"While our businesses have continued to perform well against this uncertain backdrop, Asciano will not be immune if there is a dramatic fall in economic activity in Australia."
"We are therefore not going to give specific guidance for FY12 (financial 2012) at this time."
Asciano confirmed volumes in the Pacific National Coal business were down 9% in the September quarter, while it also said volumes were hit by lower exports in Queensland.
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