Australian shares are on track for their worst month since the global financial crisis, with banks leading another sharp sell-off on Friday as investors fretted about the state of global economy and developing markets.

The S&P/ASX 200 index has lost 8.9 per cent so far this month, the worst result since its 12.6 per cent plunge in October 2008. The previous worst result was a 7.9 per cent drop in May 2010.

With moves of over 2 per cent in either direction mid-week cancelling each other out, the benchmark S&P/ASX 200 index dropped 0.1 per cent on Friday and 0.6 per cent for the week. Credit:Dominic Lorrimer

In early afternoon trade on Friday, the benchmark index was down 1.8 per cent at 5190.8, while the broader All Ordinaries Index shed 1.8 per cent to 5201.3.

The fall was sparked by Wall Street's worst session in 18 months, with the Dow Jones falling 2.1 per cent overnight amid mounting concern over the state of emerging markets and global economic growth.