Banks and supermarkets drag Australian shares lower

All of the major banks were down sharply.

ANZ had fallen the most, by 3.0 per cent, putting it on track for its biggest decline since a 3.7 per cent drop on March 4.

NAB had dropped 2.3 per cent, CBA was down 2.0 per cent and Westpac had retreated 1.8 per cent, while investment bank Macquarie was 0.6 per cent lower.

Perpetual shares were in a trading halt pending an announcement regarding "an approach Perpetual has received in relation to a potential change of control transaction".  

Coles was also on track for its biggest drop in four months, falling 5.8 per cent as the supermarket giant said it was considering the potential purchase of pet insurer Greencross from private equity firm TPG 

"Discussions remain incomplete and there is no certainty that a transaction will proceed," Coles said.

Woolworths was 2.2 per cent lower.

In the technology sector, Objective Corp crashed 46.2 per cent to a six-year low of $5.54.

The fall came after the Australian defence department failed to renew a software contract that had been in place for 25 years, following months of negotiations.

Objective Corp founder and chief executive Tony Walls said the company was "deeply disappointed" with the decision.

In the heavyweight mining sector, South32 had soared 10.3 per cent to a two-week high of $4.30 after the company said it would sell its aluminium businesses to Alcoa for up to $US5.6 billion ($8 billion). 

The assets include South32's majority stake in Worsley Alumina, its integrated bauxite mining and alumina refining operation in Western Australia, as well as operations in South Africa and Brazil.

The transaction will reposition South32 as a base metals company focused on copper, zinc, silver and lead.

Elsewhere in the sector, BHP was up 1.4 per cent, Fortescue had climbed 0.9 per cent and Rio Tinto had dropped 0.2 per cent.

The Australian dollar was trading for 68.92 US cents, from 68.77 US cents at 5pm on Tuesday.