The S&P/ASX200 index opened five per cent lower, losing 217.6 points to 4103.3 - its lowest point since June 1, 2005.

In early trading, 195 shares were down, and only two shares were higher.

BHP Billiton was down as much as $1.69, or 5.7pc, to $28.15. Rio Tinto was off another $4.71, or 6pc, to $73.30.

The Commonwealth Bank was down as much as $2.65, or 6.3pc, at $39.75. while ANZ lost 83 cents, oro 5pc, to $15.82.

The market fell following concerns that governments around the world would fail to avert a global recession sent Wall Street stocks tumbling in late trade.

Representatives from the G20 group, comprised of the world's largest economies, will meet in Washington over the weekend to hammer out a new plan to contain the crisis.

''Everyone will be watching the Dow futures in the US for a glimmer of hope,'' Keith Thompson of Shadforths said before the market opened. He expects a 180 point drop at the local market's open.

''It's going to be a tough day. We are going to be pushed today by margin calls," he said, referring to investors who borrow money to buy shares.

When the shares drop in value, these investors are forced to either inject more cash to maintain their margin loans or to sell the stocks.

Because of the way the orders are sent through, most buys and sell orders hit the market around 11.00 to 11.30am and around 2pm, Mr Thompson said.