It has been a day of carnage on the Australian share market, with investors wiping nearly $100 billion off the value of local stocks.

The market has closed down 7.3 per cent - its worst one-day fall since 1989.

Today, investors took their cue from Asia and Europe, where the FTSE fell more than 5.5 per cent.

Wall Street was closed for a public holiday, and there are fears about what is to come when it reopens tonight.

The plunges comes on the back of new fears the US economic slowdown is spreading across the world.

The All Ordinaries dived 409 points to 5,222 and the ASX 200 slumped 394 points to 5,187.

No sectors have been secure from the hammering.

The miners have been deeply in the red on lower base metals prices. Rio Tinto shed 11.6 per cent to $101.

BHP Billiton dropped 6.9 per cent to $31.

As for the financial sector, the ANZ suffered a 7.1 per cent loss to $24.35.

It has been such a volatile day that the website of Australia's largest online sharebroker CommSec crashed after being overloaded with an unprecedented number of trades on the site as the market opened.

But the Commonwealth Bank fared the best of the big banks, losing a relatively meagre 3.8 per cent to $48.85.

In the property sector, Centro Properties lost 14 per cent, while the related Centro Retail Group has been hammered and has closed nearly 25 per cent down.

About the only performer has been Consolidated Media Holdings (CMH), after news that Lachlan Murdoch and James Packer want to buy it from shareholders for $3.3 billion.

After coming out of a trading halt, CMH shares have skyrocketed 9.6 per cent to $4.23.

About 5:00pm AEDT, the Australian dollar was buying 85.95 US cents, 44.3 UK pence, 91.22 Japanese yen, and 59.53 euro cents.

West Texas crude oil was fetching $US88.62 a barrel and spot gold was worth $US859 an ounce.

Asian markets

Asian stock markets also took a battering today, with key markets shedding up to 8 per cent.

By midday AEDT, every market in the region was in virtual free-fall.

Trading was briefly suspended in South Korea and India, while jittery investors elsewhere in Asia watched markets open sharply in the red and then keep plummeting.

Japanese shares fell more than 5 per cent to a 28-month low, while Indian shares pared losses after losing 11.5 per cent in early trade.

South Korean shares closed down at almost 4.5 per cent, while Taiwan's share prices closed 6.5 per cent lower.

In London, the FTSE 100 index of leading shares plunged by 3.3 per cent to 5,393 points just after the start of trade.

Moves to ease concerns

Prime Minister Kevin Rudd says the Australian economy remains strong, despite the share market turmoil.

He has tried to ease concerns saying the Federal Government is laying strong foundations for the economy, with plans for Budget surpluses and investment in skills and infrastructure.

"Responsible economic management are core businesses for the Australian Government," he said.

"That's why the economy was the absolute central focus of the first Cabinet meeting fo the Government yesterday in Perth, when we established Infrastructure Australia."

Meanwhile, a leading economist says the share market turbulence may lead the Reserve Bank (RBA) to keep interest rates on hold.

Chris Richardson from Access Economics says the investment woes of Australians may in fact be the silver lining for people facing mortgage hikes.

But Mr Richardson says tomorrow's quarterly inflation figure will be make or break for the RBA when it meets in February.

"If it's bad enough, the Reserve will raise rates," he said.

"The tipping point on underlying inflation in the last three months, if that's 0.8 [per cent] or worse, you can expect the Reserve Bank will pull the trigger."