SYDNEY, Oct 6, 2008 (AFP) - Australian shares fell 2.1 percent in morning trade Tuesday as panic over the scope of the US-based financial crisis sent markets plummeting worldwide.

The benchmark S&P/ASX200 lost 94.4 points to 4,446.0 at noon (0100 GMT), while the broader All Ordinaries was down 109 points at 4,435.7.

The market had clawed back some early losses, which saw the key index down more than 3.0 percent in early trade as banks and the big miners led the fall.

'Markets are gripped by panic and fear that the credit crisis is spreading and deepening,' economists at St. George Bank in Australia were quoted as saying by Dow Jones Newswires.

Global stock markets reeled Monday, as panicked investors scurried for cover on fears that a much-vaunted US finance sector bailout will fail to end a crippling credit crisis.

Some European bourses saw record declines, while in the US the Dow Jones Industrial Average fell below 10,000 for the first time since 2004.

Traders were also keeping an eye on Australia's central bank, which was expected to announce a cut in interest rates after its monthly board meeting on Tuesday.

The credit crunch would likely prompt the Reserve Bank of Australia to lower its official cash rate by up to 50 basis points as fears about a global slowdown outweigh concerns about domestic inflation, analysts said.