Dollar drop spooks stock investors The stock market ended sharply lower, dropping to its lowest since late January as the faltering Australian dollar persuaded overseas investors to continue selling off local shares. The benchmark S&P/ASX200 lost 54 points, or 1.1 per cent, to 4781.2, while the broader All Ordinaries dropped 53.4 points, or 1.1 per cent, to 4771.8. The sell-off was broad-based with all major sectors falling at least 1 per cent. The Australian dollar continued its downward trend, reaching as low as 94.35 US cents, its lowest point since October 2011, before trading at around 94.55 US cents in the evening. "The weakness in the Australian dollar is scaring offshore investors who hold a lot of these high-yield stocks - Telstra, the banks, the REITs - and that's where a lot of selling has been concentrated towards," said BBY institutional dealer Anson Rosewall said. Investors took their cues from overnight losses on Wall Street and were spooked during the session by the wild gyrations of Japan's Nikkei, which ended the day 0.85 per cent lower. Today's loss takes the Nikkei's recent sell-off to near 20 per cent, the conventional definition of a bear market. The ASX200 has now unwound most of its gains this year. It was about 12.3 per cent higher for the year until May 14, where it hit a 2013-high of 5220.987. It has since fallen 8.4 per cent. For the year the ASX200 is up 2.8 per cent. So as I look across the spectrum, there are a lot of defensives that are being sold. "I think they are actually OK, not because they offer yield, but because they are defensive," he said. Among the banks, Westpac dipped 1.7 per cent to $27.71, ANZ fell 1.3 per cent to $26.86, NAB lost 0.7 per cent to $28.75 and CBA slipped 0.2 per cent to $66.11. Telstra also took a drubbing, finishing 1.7 per cent lower at $4.60. However, JBWere executive director Mike Kendall said there was still support for high-yield stocks. ""While for an offshore investor the prospects of the dollar heading to 90 US cents is going to erode the returns on their Australian investment portfolio, for an Australian investors, especially a super fund, a lot of the high yield stocks have sold off a couple of dollars from where they were three weeks ago and they're looking attractive,"" he said. Among miners, Rio Tinto dropped 0.5 per cent to $54.07, while rival BHP was relatively flat, finishing down just 0.1 per cent at $33.77. Iron ore miner Fortescue lost 3.4 per cent to $3.43. Gold miner Newcrest was battered, taking a 6.9 per cent hit to finish at $13.36. with Glenda Kwek