At 16:15 (AEST), the benchmark S&P/ASX200 index was down 32.9 points, or 0.69 per cent, at 4701.2, while the broader All Ordinaries fell 33 points, or 0.7 per cent, to 4708.
IG Markets research analyst Ben Potter said the local bourse followed Asia markets down in the afternoon session, with the Hang Seng, Shanghai Composite and Kospi indices falling 2.8 per cent, two per cent and 1.4 per cent, respectively by 15:20 AEST.
A weak US lead dragged down the materials, industrial and financials sectors, he said.
RBS Morgans director of equities Bill Chatterton said the local market was cooling off after yesterday's rise to a fresh 11-month high.
"There's a little bit of caution that creeps into the market around this time of year," he said.
Copper and zinc prices fell in offshore markets,and the strong dollar was making it difficult for resource stocks to keep increasing profits, he added.
"But with the influence of China still quite strong, volumes are pretty good, prices have been moving up, so there is a bit of a balancing act going on between the currency going up and commodity prices."
BHP Billiton lost 63 cents to $37.72 and rival Rio Tinto fell 82 cents to $60.92.
Major oil stocks were weaker, with Woodside Petroleum backtracking from Wednesday's 5.1 per cent surge to close down $1.40, or 2.64 per cent, at $51.71.
Mr Chatterton noted the stock has put on over $10 since mid July.
By 16:21 AEST major lenders were mixed, with Westpac firming 26 cents to $25.56 and Commonwealth Bank steady at $50.00.
ANZ lost nine cents to $23.49 and NAB fell 39 cents to $29.87.
Brisbane-based Suncorp Metway added five cents to $8.30 after announcing it is in talks to sell its real estate business Hooker Corporation back to the grandson of its founder.
Diversified financials put in a mixed performance, with QBE Insurance off 28 cents to $24.32 and Insurance Australia Group firmed two cents to $3.80.
Centro Properties Group surged eight cents, or 27.12 per cent to 37.5 cents but could not explain the rise to the Australian Securities Exchange after the regulator enquired.
Major gold stocks were sold off as the precious metal's price on the local market declined.
By 16:30 (AEST) the spot price of gold in Sydney was $1011.80 per fine ounce, down $US1.75 on yesterday's close of $US1013.55 per fine ounce.
Dual-listed Newmont Mining lost 16 cents, or 3.08 per cent, to $5.04, Lihir Gold fell seven cents, or 2.27 per cent, to $3.01 and Newcrest Mining dropped 75 cents, or 2.18 per cent, to $33.59.
On the Sydney Futures Exchange, the December share price index contract declined 33 points to 4714, on a volume of 26,761 contracts.
Resources push shares lower at noonJump in energy demand fuels stocks
