Aust stocks close little changed

Local market pares losses as investors switch into yield stocks on iron ore worries.

The Australian sharemarket has narrowed morning losses to close little changed as investors switched  into yield stocks and out of second-tier iron ore miners as the commodity's price continues to fall.

At the 4.15pm (AEST) official market close, the benchmark S&P/ASX200 index edged up 4.2 points, or 0.08%, to 5,424.6 points, while the broader All Ordinaries index inched up 2.2 points, or 0.04 %, to 5,403.9 points.

UBS executive director of equity sales Rob Taubman said the fall in the iron ore price to $US97.50 a tonne has been front of mind today, as investors search for yield.

"There's more pressure on second-tier miners like Fortescue and BC Iron, but ti's still continuing to pressure the majors," Mr Taubman said.

"Conservatism and yield-basing is still the pattern.

There's stocks such as Telstra that are continuing to break 10-year highs. Woolworths is continuing to trade up."

Mr Taubman said very few stocks drove the afternoon recovery, notably Telstra, Woodside Petroleum and the Commonwealth Bank.

A sharp drop in consumer sentiment this morning also weighed on the industrials sector, he said.

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