Shares were on track for their biggest fall in three months after minutes from the Federal Reserve's most recent policy-setting meeting showed rising unease about the US central bank's recent stimulus efforts. Domestic earnings reports had mixed effects on shares.
At 11.55 GMT, the benchmark S&P/ASX 200 was down 0.9 per cent at 5052.9 after falling to 5042.3. The index was up 27 per cent since June, having struck a 4 1/2 year high of 5106.6 yesterday.
Overnight, the S&P 500 fell 1.2 per cent, its biggest fall since mid-November, after Fed minutes showed that officials worried the central bank's easy-money policies could lead to instability in financial markets and might be hard to pull back in the future.
Traders said global equity markets were due for a pullback after recent strong gains.
"Fed minutes talking about paring back quantitative easing pushed equities down, but if the Fed were to wind that back in an orderly way, it would be a very strong signal of confidence in the economy," said Macquarie Private Wealth investment adviser James Rosenberg.
"Global equities are due for a pullback on technical factors, valuation and buyer fatigue, but I don't see this as the start of a significant correction."
Resources were weakest, with BHP Billion, Rio Tinto and Fortescue down 2.5 per cent-3.2 per cent. That came after miners fell sharply following a weak sales report from mining-equipment maker, Caterpillar, and a fall in base metal prices on the London Metal Exchange.
Woodside Petroleum fell 2.4 per cent following downgrades from Citi, Macquarie and Morgan Stanley.
Origin Energy dropped 7.5 per cent on a lower-than-expected first-half profit, full-year earnings downgrade and a cost blowout on a liquefied natural gas project. It was also hit by a credit rating downgrade from Standard & Poor's.
AMP, Qantas and IAG rose 0.6 per cent-4.6 per cent on stronger-than-expected earnings reports.
