(Adds analysis, quotes, stocks on the move)
SYDNEY, Jan 30 (Reuters) - Australian shares lost 0.9 percent on Thursday after Wall Street dropped overnight as the U.S. Federal Reserve decided to continue tapering its bond-buying programme.
A slump in Australia's Treasury Wine Estates Ltd also dragged on the market. It fell 17.5 percent to a near two-year low of A$3.76, after downgrading its full-year earnings guidance by almost a fifth on weak demand in China and stiff competition in its home market.
The 'Big Four' banks all posted losses with Commonwealth Bank of Australia, the country's biggest bank by market capitalisation, and Westpac Banking Corp both falling 0.9 percent. Mid-cap Bendigo and Adelaide Bank Ltd slipped 0.3 percent.
U.S. stocks dropped more than 1 percent overnight, after the Federal Reserve stuck with its plan to scale back stimulus by another $10 billion even in the midst of emerging market turmoil.
The S&P/ASX 200 index lost 45.4 points to 5,183.6 by 0051 GMT, after touching a session low of 5,161.5. The benchmark rose 1 percent on Wednesday.
"Markets continued to be concerned that Fed tapering may trigger ongoing volatility in some emerging currencies as investors withdraw funds from those markets," noted Chay Flack, an equities dealer at CMC Markets Stockbroking.
"Tapering will be an ongoing theme throughout the year."
The ASX has had a spiritless start to the year, falling 3.2 percent so far in January as slowing growth in China and fears over Fed tapering have led investors to step away from equities.
Major resource stocks were in freefall as spot iron ore hovered near the lows seen in July, pressured by weaker steel prices in top consumer China, and as trading activity winds down ahead of the Lunar New Year.
The market's only reprieve was gold, which rose in choppy trade as global equities slumped. Newcrest Mining Ltd added 0.6 percent while Beadell Resources Ltd (Other OTC: BDREF - news) climbed 4.3 percent.
Navitas Ltd lost 2.3 percent after the education services provider reported its net profit after tax at A$36.1 million, an increase of 3 percent. However, the company said student numbers had fallen in its Asia and African colleges.
Beach Energy Ltd fell 2.1 percent after reporting December quarter revenue of A$173 million, compared to A$287 million in the previous corresponding period.
New Zealand's benchmark NZX 50 index shed 0.8 percent to 4,841.4.
(Reporting by Thuy Ong; Editing by Eric Meijer)