Aust stocks narrow losses at close

Worries about falling commodity prices and the weaker Chinese currency weighed on the local sharemarket today, with the bourse narrowing earlier losses to close half a per cent lower.

At the 4.15pm (AEDT) official market close, the benchmark S&P/ASX200 index was 29.6 points, or 0.55%, lower at 5,384.2 points, while the broader All Ordinaries index dropped 28.8 points, or 0.53%, to 5,400.5 points.

The Westpac-Melbourne Institute index of consumer sentiment dropped to its lowest level since May on growing fears of job losses.

Meanwhile, official data showed demand for home loans was steady in January, despite a lift to loans for first home buyers.

IG chief market strategist Chris Weston said the market was focused on China and price moves in iron ore, copper, steel and coal today.

"Asia is seeing greater volatility than other markets right now and many of the bears will be looking at this as a potentially defining moment for the Tiger economy and the commodity trade in general," Mr Weston said.

"Spot iron ore saw much calmer price action yesterday, but futures re-opened 1.7% lower today.

"The weaker RMB is actually part of the problem behind the weaker iron ore and copper price, as China is a major importer of these commodities, and a weaker currency subtracts from the purchasing power of these importers."

Materials were mixed, with the major miners edging back into the black after heavy falls earlier in the week as the iron ore price dropped.