Sydney - Australian stocks gave up early gains Friday and closed down 1 per cent after gaining 2.8 per cent on the bell.

The initial enthusiasm was created by a Wall Street rally overnight, which saw the blue-chip Dow Jones Industrial Average put on 4.6 per cent.

The ASX 200 eventually gave up 42 points to end the week at 4,3970.

Macquarie Bank economist Lucinda Chan said the reality of a global downturn was weighing on stocks, particularly those backed by commodities.

"Sentiment towards base metals in particular is very negative," Chan said. "People are moving out of those sectors at the moment." (dpa)