Australian shares have closed sharply lower, posting their worst fall since August, due to rising fears of a global recession.

Key points: 90 per cent of the companies in the ASX 200 ended in the red, while some gold miners rose

90 per cent of the companies in the ASX 200 ended in the red, while some gold miners rose Foreign markets were heavily sold-off after the US released worse-than-expected jobs and manufacturing data

Foreign markets were heavily sold-off after the US released worse-than-expected jobs and manufacturing data The US economy is starting to show signs of weakness, exacerbated by its trade wars

The ASX 200 dropped 2.2 per cent to end at 6,493 points on Thursday — a slight recovery compared to its earlier trading losses (-2.4 per cent).

It has, however, plunged by 3.7 per cent in two days, following Wednesday's losses (-1.5 per cent).

In dollar terms, the local share market lost around $74 billion in value over two trading sessions.

Investor sentiment has also dipped across the Asia-Pacific, with Tokyo's Nikkei (-2 per cent) and Hong Kong's Hang Seng index (-0.6 per cent) experiencing moderate to heavy losses.

The Australian dollar is buying 67.1 US cents, around its lowest value in a decade.

"We are mapping out a very similar pattern to October last year — sharp fall, slow rise, sharp fall, slow rise," stockbroker and author of Marcus Today newsletter, Marcus Padley said.

"The evidence for our deepest fear, global recession, has been building over the past few weeks and that kicked up again with the US ISM [manufacturing] numbers and then some more poor private-sector-employment data on Wednesday night.

"I wouldn't be making any brave calls until we see the key US jobs figures on Friday, and I doubt they are going to help us much."

Best and worst performers

Every sector posted heavy losses, with energy (-2.9 per cent), materials (-2.7 per cent) and telcos (-2.5 per cent) being the weakest performers.

The major banks — Commonwealth Bank, Westpac, ANZ and NAB — were among the biggest drags on the market, losing between 2.4 and 3.5 per cent each.

Shares in mining giants BHP, Rio Tinto and Fortescue Metals dropped between 3.2 and 4.2 per cent each.

Energy companies were also hard hit, with Origin Energy, Santos and Woodside Petroleum down between 2.9 and 4.1 per cent.

Mr Padley said it was little surprise energy and the miners were among the hardest hit because they are the most heavily exposed to sentiment about the global economy.

"Apart from gold, the least worst were utilities which are seen as defensive and can achieve moderate, regulated earnings even in recession and also benefit from falling interest rates," he said.

15 companies on the ASX 200 — with gold miners among the list — climbed higher amid the sea of red.

Northern Star Resources, Saracen Mineral Holdings and Newcrest Mining were the best-performing stocks.

The safe-haven demand for gold surged amid concerns of a global economic downturn.

Spot gold prices have lifted 1.4 per cent to $US1,500.37 an ounce.

On the flipside, Nearmap (-5.5 per cent) and Austal (-5.1 per cent) posted some of the steepest losses.

While the ASX200 is now down 5 per cent from its record close at the end of June, it has still managed to put on 15 per cent since the start of the year as it emerged out of December's sharp correction.

Mounting worldwide risks

The local market's weak performance follows a heavy sell-off that occurred across foreign markets overnight.

London's FTSE was the worst performer, dropping 3.2 per cent in one session.

On Wall Street, the Dow Jones index shed 838 points, or 3.1 per cent, in the past couple of days.

The plunge was triggered by the United States recording its worst manufacturing figures in more than 10 years, and worse-than-expected private sector job figures.

It appears the ongoing US-China trade war is starting to hurt America's economy, which has begun to show signs of faltering.

Adding to trade concerns, the US will impose $US7.5 billion ($11.2 billion) worth of tariffs on European Union imports in two weeks.

This was after the World Trade Organisation (WTO) ruled that the EU had been granting illegal subsidies to Airbus to give it an unfair competitive advantage over Boeing.

Investors also reacted poorly to pessimistic data from the European Union, revealing that factory activity had contracted to a seven-year low.