Global markets dropped on Friday after Standard & Poor's (S&P) stripped France and Austria of their triple-A status and downgraded seven debt-laden European countries.
Miners and financial stocks led the local market lower today as investors worried the euro zone bailout fund would not have sufficient firepower should talks to restructure Greece's debt fail ahead of a 14.4 billion euros ($A17.76 billion) bond repayment in March.
But brokers noted that the market reaction to the news has been relatively muted as many of these events have effectively been priced in.
"If we had a Greek default there would be an initial bad reaction but I think there are probably a lot of people who have factored in an event like that," Burrell Stockbroking advisor Jamie Elgar said.
At 1202 AEDT, the benchmark S&P/ASX200 index was down 49.9 points, or 1.2 per cent, at 4,145.9, while the broader All Ordinaries index was down 47.1 points, or 1.1 per cent, at 4,208.3.
On the ASX 24, the March 2012 share price index futures contract was down 62 points at 4,118, with 13,971 contracts traded.
Miners dropped 1.5 per cent after metals prices fell offshore amid the spreading risk aversion.
BHP Billiton fell 1.4 per cent to $36.10 while Rio Tinto dropped 0.9 per cent to $64.63.
Fortescue Metals shed 2.7 per cent to $4.62, as it resumed operations at two of its Pilbara excavations that were closed because of Tropical Cyclone Heidi.
Commodities and resources could come under further pressure this week if China's gross domestic product (GDP) figures, due to be released on Tuesday, come in below the 8.7 per cent growth expected by analysts.
"Markets may become unsettled if significantly worse growth rates are reported, suggesting the possibility of a harder, export-led downturn that may be somewhat outside the control of China's monetary authorities," CMC Market's chief market analyst Ric Spooner said.
Financial stocks were down 1.3 per cent as dealers worried the euro zone debt crisis could put further pressure on banks' lending costs.
Among the morning's biggest losers was Platinum Asset Management, which fell to an almost three-year low as investors continued to sell off its stock after the fund last week forecast a drop in profit.
Its shares were down 2.9 per cent at $3.38. One of the few stocks bucking the market trend was Leighton Holdings.
Its shares added four per cent to $21.37 after the construction giant upgraded its underlying profit forecast for the six months to December to $270 million, from the previously advised $250 million.
Property stocks also got a boost from better than expected data showing the number of home loans approved in November rose 1.4 per cent. For the latest updates on the stock market, visit Stock Market Today For the latest updates PRESS CTR + D or visit Stock Market news Today
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