The sharemarket fell slightly in quiet trading yesterday as global equity markets awaited the outcome of negotiations to avoid the so-called fiscal cliff that threatens to slow the US economy next year unless politicians reach agreement on taxes and spending by December 31.
Banks were restrained by profit-taking after strong gains this year,while iron ore miners hit multi-month highs after improved manufacturing data from China triggered further gains in iron ore prices on Friday.
The benchmark S&P/ASX 200 closed down 0.2 per cent at 4573.4 after being confined to a narrow range of 4569.4-4581.6.
Share-trading volume worth$3.4 billion was below the year's average of$3.7bn.
Among financials,the major banks fell between 0.5 per cent and 0.9 per cent,Suncorp declined 1.4 per cent and QBE Insurance dropped 1.6 per cent.
BHP Billiton,Rio Tinto and Fortescue Metals rose between 0.8 per cent and 3.7 per cent after spot iron ore added 2.2 per cent on Friday.
Gold was the worst-performing sector,falling 2.76 per cent.Newcrest posted the biggest decline among stocks on the S&P/ASX 20,with the goldminer tumbling 2.73 per cent,or 65c,to$23.20,after spot gold weakened.
CMC Markets senior trader Tim Waterer said investors were growing more cautious by the day as the yet-to-be-resolved fiscal cliff issue imposed a dampening effect on any market reaction to positive economic indicators.
"Overall,it was a rather nondescript performance by the Australian bourse with any distinct market direction proving to be elusive in light of the ongoing US fiscal cliff talks,"Mr Waterer said in a research note.
Macquarie Private Wealth investment adviser John Milroy said:"It's been a fairly tepid start to the week as liquidity is drying up before Christmas and we're still waiting for a deal on the US fiscal cliff."
Weekend news was mostly positive for equities,with investors expecting aggressive monetary stimulus by the Bank of Japan after a landslide win for the Liberal Democratic Party in Sunday's Japanese election,and US House Speaker John Boehner reportedly having offered to allow tax hikes on wealthy Americans,in return for cuts to federal entitlement programs.
While President Barack Obama reportedly rejected the offer,Macquarie's Mr Milroy said it could lead to a year-end deal to resolve the US fiscal cliff.
In Asia,the Nikkei 225 rose 1.4 per cent as the landslide win by the LDP/New Komeito coalition in Japan's election weighed on the Japanese yen because of the LDP's pledge to push for unlimited quantitative easing in Japan in order to boost growth.
China's Shanghai Composite rose 0.5 per cent after surging 4.3 per cent on Friday.
Fairfax Media rose 1 per cent after agreeing to sell its remaining stake in New Zealand internet classifieds business Trade Me Group for$616 million.
Fairfax chief executive Greg Hywood said the proceeds would be used to reduce debt and complete the company's structural transformation.However,analysts cautioned that the Trade Me sale would reduce earnings for Fairfax.
Billabong was placed in a trading halt pending an announcement about a possible takeover bid.Media reports claimed the surfwear company had received a$1.10-a-share takeover proposal worth$526.8m.
Integra Mining fell 8.3 per cent after Van Eck Associates announced on Friday that it was removing Integra from its US-listed Market Vectors Junior Gold Miners index.
In the healthcare sector,CSL declined 1.2 per cent and Sonic Healthcare fell 1.1 per cent.
