Australian shares follow Wall St lower

The Australian share market followed Wall Street lower in opening trade, as the nation's first minority government since World War II prepares to begin operations.

At 10.15am AEST (12.15pm NZT) the benchmark S&P/ASX200 index was down 22.1 points, or 0.48 per cent, at 4551.1, while the broader All Ordinaries index had fallen 21.9 points, or 0.47 per cent, at 4591.1.

On the Sydney Futures Exchange, the September share price index contract was 22 points lower to 4555 on a volume of 7490 contracts.

In the US overnight, stocks finished lower, with fresh concerns about Europe's debt problems weighing on sentiment.

The Dow Jones industrial average was down 107.24 points, or 1.03 per cent, at 10,340.69 points, while the broader S&P 500 index finished 12.67 points, or 1.15 per cent lower at 1091.84 points.

The tech-heavy Nasdaq composite closed down 24.86 points, or 1.11 per cent, at 2208.89 points.

In Australia on Wednesday, the Gillard-led Australian Labor Party prepared to begin the task of governing after key independent MPs on Tuesday decided to back the party.

The Opposition said cracks already were appearing in the relationship, with questions over whether Labor's proposed mining tax would be part of a tax summit.

On Wednesday, Foster's Group said it had rejected a proposal to buy its Treasury Wine Estates wine assets for between A$2.3 billion and A$2.7 billion and at 10.15am AEST its shares were up 28 cents, or 4.61 per cent, at A$6.35.

The materials sector was off to a poor start, losing almost one per cent in opening trade, with heavyweight BHP Billiton Ltd down 55 cents, or 1.43 per cent, at A$37.89 while rival Rio Tinto had lost A$1.14 at A$73.21.

Shares in Sydney-based gold explorer Andean Resources were steady at A$7.04, despite Canadian gold miner Eldorado Gold Corporation withdrawing its bid for the company.

After a good run in recent days, the big four banks were weaker by 1020 AEST, with Commonwealth Bank down 34 cents at A$52.01, Westpac 27 cents lower at A$22.76, National Australia Bank losing 16 cents at A$24.24 and ANZ off 18 cents, at A$23.58.

The sell-off in Macquarie Group continued, after the company on Monday issued a profit downgrade, with shares in the investment bank falling another 24 cents in early trade on Wednesday, at A$34.23.

IG Markets analyst Ben Potter said materials stocks and financials were likely to come under pressure following the US lead.

"It looks we'll see some broad-based weakness today as the market comes to grips with the new Labor Government," he said.

"Financials will likely see selling pressure after the US sector fell 2.3 per cent."

"A Wall Street Journal article reported the European bank stress tests weren't as comprehensive as they should have been, with some banks holding riskier portfolios than had actually been revealed."

At 10.35am AEST, gold was trading at A$1256 per fine ounce, down A$US6.27 per ounce from Tuesday's closing price of A$US1249.73.

Gold prices settled at a record high on Tuesday, following renewed worries about European banks and the global economy.

Newcrest Mining added 95 cents, or 2.5 per cent, to A$38.93, while other gold stocks were flat.

At 10.45am AEST, the top-traded stock by volume was Central Petroleum, which rose two cents, or 26.32 per cent, to 9.6 cents with 50.969 million shares changing hands.

At 10.55am AEST, overall turnover was 589 million shares worth A$1.23 billion changing hands, with 325 stocks up, 374 down and 326 unchanged.

- AAP