Finance report

MARK COLVIN: And Scott Alle's here now with the day's report on the markets.

SCOTT ALLE: Fresh fears about debt problems in Europe pulled local markets down for the eighth straight day to an 11 month low.

The ASX200 fell one-and-a-half per cent or 64 points to 4,237.

While the All Ords dropped 62 points 4,262.

Today it was the prospect of the Spanish government's credit rating being downgraded that rattled investors.

That weighed heavily on mining stocks earlier in the day with the mining index leading the overall market decline.

But they rallied late in the session on media reports of a compromise deal on the Resources Super Profits Tax.

BHP Billiton jumped from $36.70 shortly after two in the east, to $37.11 at the close.

Rio Tinto also bounced, from around $64.20 to $65.10.

Fortescue Metals rose from about $3.90 to $4.00.

As we just heard, Metcash will buy the Franklins supermarket chain for $215 million.

Metcash shares closed up 3.1 per cent at $4.32.

In contrast, Woolworths was down 1.4 per cent, and Wesfarmers (which owns Coles) ended 3.1 per cent lower at $27.77.

The major banks were all down, with ANZ and the Commonwealth Bank losing almost 2.5 per cent, while Westpac was down 2 per cent. NAB slipped 1.1 per cent.

Gold is lower at $US12,041 an ounce.

Oil has dipped to $US74.50 a barrel.

And finally Mark, the Australian dollar is still losing ground on the weaker outlook for commodities; it's 83.4 US cents.

MARK COLVIN: Scott Alle thanks very much.