THE sharemarket ended the week on a low note as investors took fright after budget talks in the US to resolve the fiscal cliff fell into disarray.
The benchmark S&P/ASX 200 closed down 10.5 points, or 0.2 per cent, at 4623.6 points, reversing gains that had seen the index up as much as 0.5 per cent at 4658.7 points.
"Sentiment has taken a change for the worse," IG institutional trader Chris Weston said yesterday.
US House of Representatives Republican leaders cancelled a vote on their plan after it appeared they lacked support for a back-up scheme proposed as a way of partially averting the fiscal cliff, and instructed members to go home until after Christmas. The sudden turn of events left negotiations between Democrats and Republicans in disarray with no clear path forward.
The change in sentiment quickly reversed gains among Australian shares that had been boosted earlier by encouraging US economic data and hopes for a positive outcome to the fiscal-cliff talks.
"With an apparent obstacle coming this close to the deadline, investor anxiety naturally heightened today and this was reflected in the performance of the ASX 200," said Tim Waterer, a senior trader at CMC Markets.
Shares in Australian companies considered risk assets, such as those in the resources industry, erased earlier gains. BHP Billiton and Rio Tinto were down 0.9 per cent while Fortescue Metals Group retreated 2.7 per cent. Some property companies, such as Dexus Property Group and Stockland fell after going ex-dividend.
High-dividend-yielding companies including banks mostly managed to hold their gains. Australia & New Zealand Banking Group was up 0.6 per cent and Westpac and Commonwealth Bank of Australia were 0.8 per cent higher. National Australia Bank was up 0.2 per cent.
Qantas shares ended flat after the airline reported that its load factors - a measure of the portion of seats filled on its planes - increased in November as its international unit performed better.
