The local sharemarket fell in cautious trade yesterday before US Federal Reserve chairman Ben Bernanke's testimony to US congress and the release overnight of the minutes of this month's Fed board meeting.
The benchmark S&P/ASX 200 closed down 0.3 per cent at 5165.4 after an early rise to 5203.4.
It was the second consecutive fall in the index, which narrowly failed to make a fresh five-year high on Monday despite fresh record highs on Wall Street.
Miners rose, with BHP Billiton, Rio Tinto and Fortescue up 1.3-3.4 per cent after offshore peer gains and a 0.5 per cent rise in spot iron ore -- the first gain in two weeks.
However, profit-taking in financials continued, with major banks down 0.9-1.2 per cent and property trusts Westfield, Stockland and CFS Retail down 2-4 per cent.
The big four banks were trading positively until the release of the Westpac/Melbourne Institute's May survey, showing consumer sentiment fell by 7 per cent in the month.
IG market strategist Chris Weston said the data showed the Australian consumer was not in a good space, despite the recent official rate cut. "Looking at the breakdown, there was a 13.4 per cent decline in where consumers see the economy in one year ahead, while there was also a 3.9 per cent drop in current conditions," he said.
Among the banks, ANZ fell 1.15 per cent or 34c, to $29.30, Westpac shed 29c to $31.19, Commonwealth Bank lost 78c to $71.70 and National Australia Bank dipped 38c to $32.71. Myer sales rose for a fourth consecutive quarter, but chief executive Bernie Brookes spoke negatively about the retail sector.
Myer shares were down 9c, or 3.25 per cent, at $2.68.
Seven West Media fell 7.9 per cent to $2.08 after private equity company KKR sold its 12 per cent in the broadcaster.
Mining services companies remained weak. Transfield fell 6.2 per cent and Boart Longyear plunged 14 per cent as brokers slashed their price targets following their profit warnings.
Newcrest Mining declined 4.7 per cent after spot gold fell 1.3 per cent earlier.
Mr Bernanke's congressional testimony and the Fed minutes will be scrutinised for clues on when the Fed will start "tapering" its quantitative easing program, currently an open-ended plan to buy $US85 billion ($87bn) a month of US Treasury bonds and mortgage-backed securities.
"These are significant events and people expect the Fed chairman to say that further quantitative easing is necessary," said Pengana Capital portfolio manager Tim Schroeders.
Earlier, the S&P 500 rose 0.3 per cent as New York Fed president William Dudley and St Louis Fed president James Bullard helped ease concern that the Fed was planning to wind down stimulus.