THE share market closed lower in lacklustre trading, weighed down by the financial sector.
At the 4.15pm (AEST) close, the benchmark S&P/ASX200 index was down 38 points, or 0.86 per cent, at 4374.7 points, while the broader All Ordinaries index had dropped 33.9 points, or 0.77 per cent, to 4394.8 points.
On the Sydney Futures Exchange, the September share price index futures contract was 51 points lower at 4,347 points, with 24,434 contracts traded.
CMC Markets senior dealer Matt Lewis said the local market was not as weak as may have been expected, given the negative lead from the US.
"I think the market has held up relatively well largely because of strength in the materials sector,'' Mr Lewis said
"There have been rumours over the pst few days that China may ease up on the proposed tightening that it was looking to do to cool its economy.''
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Mr Lewis said the financial sector was a standout in negative terms.
"There's persistent chatter in the market that offshore funds are really building up short positions in all the big four banks over concern about exposure to the Australian property sector,'' he said.
There appeared to be a belief that the Australian property bubble would be the last bubble to burst.
"But, overall, it's another quiet day in the market. Too much and too many variables keeping people on the sidelines,'' Mr Lewis said.
"You've got the (federal) election, reporting season in the US, and we're waiting for our (the Australian) reporting season.''
Among the major banks, NAB fell 44 cents to $23.76, Westpac surrendered 37 cents to $22.15, ANZ backtracked 39 cents to $22.10 and Commonwealth Bank descended $1.23 to $49.92.
Elsewhere in the financial services sector, AXA Asia Pacific Holdings was four cents lower at $5.35 after chief executive Andrew Penn said growth in the wealth manager's Hong Kong operations was accelerating.
Among resource stocks, BHP Billiton firmed 13 cents to $38.88 and Rio Tinto picked up 43 cents at $68.23.
Petsec Energy was 0.5 cents higher at 18.5 cents as it said tighter regulations in the Gulf of Mexico in the wake of the BP oil spill would cause delays to Petsec's oil and gas projects and push up costs.
Gas-focused Santos sagged 20 cents to $13.55 as it said its operations in the Cooper Basin in outback South Australia would continue to be affected by flooding, and the company reported a fall in June quarter production.
Copper and gold producer PanAust was steady at 53 cents as it said it was on track to meet guidance after strong second quarter production.
Gold miner Newcrest Mining was off 39 cents at $32.92 after reporting production in fiscal 2010 was in line with market expectations.
The price of gold at 4.29pm AEST was $US1181.40 per fine ounce, down $US8.08 on yesterday's close of $US1189.48.
Among other stocks, beer and wine maker Foster's Group was five cents higher at $5.89 as it has blamed a light-fingered interloper for the publication of an internal earnings target.
Receivables manager Collection House was steady at 75 cents as it raised its full year dividend after posting a 21 per cent rise in full-year net profit.
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