The Australian share market has wiped-off $31 billion in value over new concerns about the strength of the United States economy.

On Friday the Dow Jones closed 360 points lower after equipment company Caterpillar warned the housing slump was starting to spread to the wider economy.

By midday, the Australian share market fell by about 2 per cent and hovered around that mark for the rest of the day.

The All Ordinaries Index ended the session 131 points lower to 6,592 while the ASX 200 lost 120 points to 6,577.

Stocks exposed to the US economy were among the worst affected today with Macquarie Bank shedding $3.33 to $79.67 as James Hardie Industries dropped 2.5 per cent to $7.

The major banks also experienced losses, the Commonwealth Bank gave-up 57 cents to $58.57 and National Australia Bank dropped 33 cents to $40.57.

In the resources sector BHP Billiton lost 2.5 per cent to $45.92 and Rio Tinto dropped $4.10 to $105.50.