Australian stocks tumbled on fresh fears about a possible Greek exit from the euro zone, with all local stock sectors weaker and the Australian dollar touching a six-month low.

Investors were also spooked by predictions by the World Bank that China's economic growth will ease this year, and a downgrading of Japan's credit rating by Fitch Ratings.

At the close on Wednesday, the benchmark S&P/ASX200 index was down 51.5 points, or 1.25 per cent, at 4,069.5.

The broader All Ordinaries index was down 52.4 points, or 1.26 per cent, at 4,121.1.

On the ASX 24, the June share price index futures contract was 64 points lower at 4,071 with 36,556 contracts traded.

The local market fell in line with other Asian bourses ahead of a fresh round of debt crisis talks by European leaders on Wednesday evening Sydney time.

The market is expecting the leaders to express a consensus that they want Greece to stay in the euro, John Curtin, associate director of Patersons Securities, said.

"The market is moving from positive to negative commentary on the slightest hint of what will happen out of Greece because contagion is the big fear," he said.

"The prevailing view from Europe is that a deal will be negotiated to stay in the euro, but until that is sorted markets will be very flighty."

Fitch Ratings' downgrade of Japan's sovereign debt rating to A-plus also weighed on the local market, IG Markets analyst, Stan Shamu said.

Falls were widespread across the local market, and the Australian dollar trading as low as 97.43 US cents at 1118 AEST - its lowest level since November.

Australia's major lenders lost at least 0.92 per cent, with ANZ Banking Group suffering the heaviest fall and closing down 36 cents, or 1.71 per cent, at $20.70.

Suncorp Group and QBE Insurance both lost 3.08 per cent, with Suncorp closing 24 cents lower at $7.55 and QBE Insurance off 39 cents to $12.29.

Market heavyweight BHP Billiton dropped 39 cents to $31.93, while Rio Tinto declined 61 cents to $56.28.

Gold major Newcrest Mining lost 50 cents, or 1.98 per cent, to $24.74 as the gold price plunged.

The spot price of gold in Sydney was $US1,557.20 per fine ounce at 1616 AEST, down $US30.58 from Tuesday's local close of $US1,587.78 per ounce.

Shares in struggling department store owner Myer Holdings sank to a four-month low after the company warned its full year profit could drop by as much as 15 per cent amid tough trading conditions in the retail sector.

Myer's stock plunged 17 cents, or 7.83 per cent, to $2.00.

National turnover was 1.54 billion securities worth $4.3 billion, with 321 stocks up, 636 down and 322 unchanged.