The Australian share market lost as much as $37 billion in value at its worst point, backing up a $42 billion slump on Tuesday, before a late bounce pared the worst of the falls.

The benchmark ASX 200 index was off as much as 2.6 per cent to 4707, and the broader All Ordinaries was down as much as 2.5 per cent at the peak of Wednesday’s sell down.

At its worst, the local market was down more than 21 per cent from its most recent peak of just under 6000 points in April 2015, putting it officially into a bear market for the first time since the Greek debt crisis of 2011.

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However, the emergence of some bargain hunting late in the afternoon was paring those falls.

By 2:49pm (AEDT) the ASX 200 was off 1 per cent at 4782 and the All Ordinaries was off 50 points to 4832.

Banks were again amongst the falls, despite a gain of 2.7 per cent for Australia’s largest lender, CBA, on its $4.6 billion half-year profit.

The rest of the big four were in the red, with National Australia Bank falling 1.5 per cent, ANZ 1.4 per cent and Westpac 0.9 per cent.

Bank of Queensland backed up an 8 per cent share slump on Tuesday with another 7.5 per cent slide to $10.79 on Wednesday, while Bendigo and Adelaide Bank also lost another 4.3 per cent.

Investment bank Macquarie was off 0.7 per cent to $60.27.

Stockbroker and author of Marcus Today, Marcus Padley, holds the view that this week’s Australian bank sell-off is more about fear than reality.

“There is fundamentals and there is sentiment, and people are very fearful of another GFC-style event,” he told ABC News Online.

CBA was stronger after its profit rise. Photo: AAP

However, Mr Padley said that does not mean that banking stocks may not fall a lot further.

“The value line in the GFC for the banks, it probably moved maybe 5 per cent and the share prices fell 56 per cent, so you have to be respectful of sentiment.”

Oil and gas firms were the other sector in the firing line – and it is in large part their debts to the banks that have put the financial sector under intense selling pressure.

Santos was 4.9 per cent lower to $2.91, Origin 1.7 per cent down to $3.75, Oil Search 1.9 per cent off to $6.62 and Woodside 1.5 per cent lower to $26.34.

West Texas crude was down to $US27.91 a barrel overnight and Brent was rebounding a little in the Asian session to $US31.03.

Other commodity producers were also being sold down.

BHP Billiton was off 2 per cent to $15.73 and Rio Tinto was down 0.8 per cent.

Even gold producers were on the nose today after their stellar run over the past couple of weeks.

Newcrest was down 2.8 per cent to $16.32.

Retailers were also being heavily sold down, with struggling supermarket giant Woolworths plunging 3.25 per cent to $22.35.

Rival Wesfarmers was off 1.6 per cent, while JB Hi-Fi was down 2.8 per cent, Harvey Norman 0.2 per cent and Myer 0.7 per cent.

Even so-called defensive stocks, such as telcos, were down: Telstra was 3.3 per cent lower at $5.42.

Mr Padley said that broad-based, fear driven sell-offs can provide a good opportunity to buy stocks.

“If 10 on the sentiment scale is irrational exuberance and zero is blind panic, we’re at about two or three at the moment,” he said.

“That is clearly a time to be thinking about buying rather than thinking about selling – it is a little bit too late to sell probably.”

Not so for Japanese investors, who were still in full sell-off mode in Tokyo, with the Nikkei down 2.8 per cent by 3:03pm.

The Australian dollar remained stubbornly resilient against the greenback at 70.6 US cents.

-ABC