Australia's Benchmark Falls on Concern Over U.S. Banks Fallout

By Shani Raja

Sept. 16 (Bloomberg) -- Australian stocks fell, led by financial companies, as the collapse of Lehman Brothers Holdings Inc. and a plunge in American International Group Inc. shares deepened concerns about global financial and economic stability.

Macquarie Group Ltd., Australia's biggest securities firm, slumped 7.4 percent to its lowest price in four years. National Australian bank Ltd., the nation's biggest by assets, declined 4.2 percent to its lowest since April 2000.

Australia's benchmark S&P/ASX 200 Index slipped 117.20 points, or 2.4 percent, to 4,700.50, the lowest since Dec. 20, 2005, at 10:30 a.m. in Sydney trading. The index, which declined 1.8 percent yesterday, has tumbled 26 percent this year.

``The markets are panicking big-time,'' said Prasad Patkar, who helps manage the equivalent of about $1.8 billion at Platypus Asset Management in Sydney. ``AIG poses a systemic risk because it's a large counterparty in the financial system. The banking sector is a bit too close to the action.''

AIG, the biggest U.S. insurer by assets, is seeking to plug a $70 billion to $75 billion financing gap, while Lehman Brothers filed the largest bankruptcy in history on Sept. 15.

To contact the reporters on this story: Shani Raja in Sydney at sraja4@bloomberg.net.