Australian shares fell 1.2 percent today as another drop in oil prices hit heavyweight resource firms such as Woodside Petroleum Ltd, while ongoing credit worries pressured financial firms. The benchmark index fell 2.8 percent on the week to post its ninth straight week of declines, the longest such losing streak since a 10-week decline between May and July 2002. Investors may need to brace for further weakness ahead given that global markets were still dogged by worries about a widening credit crisis, rising inflation and slowing corporate profits. The benchmark S&P/ASX 200 index fell 60.6 points to 4,840.4, after rising in the previous two sessions. The index has now lost almost 24 percent since the start of the year after an 11.8 percent gain in 2007
 
Energy-related firms fell after oil prices dropped by $5 yesterday, extending a decline of about 12 percent from last week's record on worries over U.S. demand. Woodside Petroleum, Australia's second-largest oil and gas producer, fell 5.1 percent to $55.50 and Oil Search Ltd dropped 8.1 percent to $5.00. BHP Billiton, the world's top miner and Australia's top oil and gas producer, fell 2.4 percent to $36.65. Financials firms fell as investors grew nervous ahead of earnings from top U.S. bank Citigroup later on Friday.

Sentiment was also dented by a Wall Street Journal report that mortgage giant Freddie Mac was considering raising capital by selling as much as $10 billion in new shares to investors. Macquarie Group, Australia's top investment bank, shed 3.8 percent to $45.92, while National Australia Bank Ltd, the nation's top lender, lost 1.2 percent to $27.01. On the upside, printing group PaperlinX Ltd climbed 14.7 percent to $1.91 after it said it expects its fiscal 2008 net profit to be well within analyst forecasts. Credit Suisse upgraded its rating on PaperlinX to neutral from underperform, citing a recent drop in its share price. CSL Ltd, the world's top maker of plasma products, rose 5.9 percent to $37.05. Stronger-than-expected earnings and a profit upgrade at Baxter International Inc augurs well for CSL, which has similar earnings drivers.

The Australian dollar recovered from lows against the U.S. dollar today as worries about the stability of the financial sector returned, although lower commodities and an uncertain rate outlook capped gains. Asian stocks fell today, dragging down the U.S. dollar after the Wall Street Journal reported U.S. mortgage giant Freddie Mac was considering raising capital by selling as much as $10 billion in new shares to investors, many of whom are expected to be existing shareholders. By 4:10 p.m. (0610 GMT), the Aussie dollar was at $0.9722/24 against the U.S. dollar, off a session low of $0.9705, but down from $0.9768/72 late yesterday. It struck a 25-year high of $0.9851 earlier this week, but has fallen since as the U.S. dollar recovered, commodity prices took a hit and the central bank governor made dovish comments.