AUSTRALIAN investors cleaved $100 billion from the sharemarket yesterday in the fourth biggest one-day sell-off in history as global stocks plunged in fear of a US recession.

Panic-selling sent the Australian market into a nosedive as another 7 per cent was hacked from the value of our stockmarket.

The fall marked the 12th in succession - its worst run since 1982.

Nearly $400 billion has now been gouged out of the local market since its November 1 peak - and experts were last night predicting more carnage today.

But ironically, the extent of the fall is likely to spare homeowners another interest rate rise, with the Reserve Bank now having to weigh up a sliding sharemarket versus rising inflation.

Treasurer Wayne Swan yesterday moved to calm investors, saying Australia was "well placed to ride out the turbulence".

The All Ordinaries index was slashed by 408.9 points, or 7.26 per cent, to 5222, the largest fall since October 29, 1987, when it fell 7.52 per cent.

The top 200 stocks fell 7.05 per cent, or 393.6 points, to 5186.8 - the biggest one-day loss for the index.

The collective value of companies in the All Ordinaries was lowered by $96 billion, taking the loss to $388 billion since the market climaxed on November 1, and $282 billion since the start of the New Year.

The Australian dollar was also sold off, losing more than US1.5c to US85.95c, as fears the US subprime mortgage crisis would severely damage the world's largest economy. And there's more pain to come.

European stocks tumbled in early trading last night and Australia's futures index is pointing to another hefty decline today.

"Momentum has taken over, there's probably a fair bit of panic selling out there now," said CMC Markets dealer Matt Wacher.

The market dived within seconds of trading early yesterday, after European stocks plunged as investors feared the US economy was heading into recession.

The mayhem caused Australia's largest online broking website Commsec to collapse as thousands of customers tried to access their accounts.

And just as it seemed time to take a breath, Asian stocks opened after lunch and the shares hit the fan.

Some of the powerhouses of world markets fell like flies, with China down, Hong Kong and Japanese stocks falling between 4 and 8 per cent.

India's stock exchange was forced to shut down for an hour after it fell 10 per cent.

A final few minutes of panic-selling ahead of the US market opening bell late yesterday saw more than 1 per cent, or about $12 billion ripped from investor's pockets.

In the end, most of the market's most popular stocks were hammered, with Rio Tinto losing 11 per cent to $101, BHP Billiton down 7 per cent to $31 and Macquarie Bank taking an 11 per cent cut to $58.20. Telstra shareholders lost 5 per cent to $4.04 and T3 shareholders saw a 9 per cent dive to $2.48.

Locally, the Reserve Bank will today see the latest inflation data, the key figure before it heads into a meeting next week to meet on its February interest rate decision.

Shadow treasurer Malcolm Turnbull said there was a strong case for rates staying put. "I think that as every day goes by, the case for the Reserve Bank holding its hand and not raising rates becomes stronger," Mr Turnbull said.

Mr Swan said Australia would be able to ride out the damaging financial wave coming from the US.

SOURCE