Greek woes pull shares to six-month lows

Australian shares slumped to a six-month closing low, erasing early gains as investors remained focused on slowing global growth and on persistent fears that Greece may have to leave the eurozone.

The benchmark S&P/ASX200 index dropped 26.6 points, or 0.7 per cent, to 4029.2, its lowest since November 25, while the broader All Ords shed 25 points, or 0.6 per cent, to 4081.2.

Among the major sectors, materials dropped 0.8 per cent, financials and energy both fell 0.6 per cent.

May has been a particularly gloomy month for the local market: the ASX200 has dropped 8.6 per cent since the beginning of the month. This week's loss shaved the last bit of 2012 gains off the index, which is now down 0.7 per cent since the start of the year.

The Australian dollar, meanwhile, is at 97.54 US cents, hovering near six-month lows, as early bargain-hunting gave way to renewed selling amid persistent worries about Europe's raging debt crisis and weak global growth.

Sharemarket volumes were heavy today in top miners and banks in options-related trading ahead of the end of the month.

"With traders still on high-alert status over the global growth picture, our mining and energy stocks in particular remain a source of fragility for the local index," said Tim Waterer, senior trader at CMC Markets.

He said traders were still looking to distance themselves from commodities and commodities-related plays, as long as the proposition of a disorderly Greek exit remained on the radar.

Local investors were also focused on just how much China's economy will slow, which would dampen demand for Australia's key commodities exports.

BHP Billiton fell 1.2 per cent and Rio Tinto ended down 0.8 per cent.

There was heavy volume in casino owner Echo Entertainment of more than 1 per cent of the company's issued capital. Crown has previously applied to authorities to lift its stake in Echo above 10 per cent.

Echo shares ended up 0.2 per cent at $4.35 on a volume of 14 million shares, about four times the daily average.

Upmarket department store David Jones was a rare gainer, rising 3.2 per cent, after a broker report suggested that the retailer is a ripe target for private equity because of its valuable real estate portfolio.

Shares in scrap metal recycler Sims Metal Management tumbled 6.1 per cent to $11.50 after the company said full-year earnings for fiscal 2012 would be "materially less" than 85 per cent of the prior corresponding period.

Shares in Acrux rose 2.4 per cent after the firm said Eli Lilly has received approval to market Axiron in Australia. Acrux expects to begin earning royalties on the sales during the 2012-13 financial year.

BusinessDay, with wires