The Australian stock market pared early gains of more than half a per cent to be flat at noon, after a a strong performance on overseas markets overnight.
At 1205 AEDT, S&P/ASX200 index fell 0.11 per cent to 5,311.2 points, while the broader All Ordinaries index decreased 0.1 per cent to 5,313.3 points.
IG market strategist Evan Lucas said the downturn was surprising given that there appeared nothing to indicate that Chinese trade data to be released later this week would be weak.
Weakness in China's economy means there is likely to be weaker demand for Australian resources.
"The (market) fall is being particularly driven by the materials space," Mr Lucas said.
"It looks like a lot of people are positioning themselves for possibly a weak number out of China's trade balance numbers on Friday, and possible discrepancies with regard to their GDP (gross domestic product) print next Tuesday."
Materials were mostly weaker.
BHP Billiton declined 0.56 per cent to $37.00, while rival Rio Tinto lost 1.02 per cent to $65.33.
Fortescue Metals retreated 1.56 per cent to $5.355 and Newcrest shed 0.82 per cent to $8.51.
Whitehaven Coal rallied 1.89 per cent to $1.885, while Santos declined 0.07 per cent to $14.34.
Oil Search increased 1.12 per cent to $8.14 and Woodside Petroleum added 0.05 per cent to $37.68.
Financials retreated from a strong start, but mostly remained just in the black.
ANZ increased 0.06 per cent to $31.88, while Commonwealth Bank rose 0.06 per cent to $77.77.
National Australia Bank retreated 0.17 per cent to $34.44, while Westpac inclined 0.12 per cent to $32.12.
Investment bank Macquarie Group shed 0.63 per cent to $54.01.
In insurance, IAG fell 0.09 per cent to $5.765, while Suncorp lost 0.08 per cent to $13.04. QBE shed 0.97 per cent to $11.755.
The retail sector was mostly stronger.
Woolworths rose 0.28 per cent to $33.855, while Wesfarmers inclined 0.57 per cent to $43.92.
Myer fell 0.37 per cent to $2.72, while rival David Jones added 0.67 per cent to $3.00.
Harvey Norman retreated 0.78 per cent to $3.195, while JB Hi-Fi lost 0.56 per cent to $21.26.
In media, Fairfax Media was flat at 64.5 cents, 21st Century Fox rallied 0.42 per cent to $38.36 and News Corp lost 2.07 per cent to $19.37.
Ten Network retreated 0.79 per cent to 31.25 cents, while Seven West lost 0.22 per cent to $2.315 and Southern Cross Media declined 3.83 per cent to $1.63.
Telstra rose 0.19 per cent to $5.29, while Qantas rose 1.61 per cent to $1.1075.
German economic data out overnight showed that the unemployment rate held steady at 6.9 per cent in December, while retail spending increased by 1.5 per cent in November.
In the United States, the November international trade report said the trade deficit shrank sharply in the month, to be at its smallest point in four years.
The stock market on Tuesday finished in the red, weighed down by poorly performing resources stocks.
The benchmark S&P/ASX200 index lost down 7.9 points, or 0.15 per cent, at 5,317.0.
The broader All Ordinaries index lost 8.9 points, or 0.17 per cent, at 5,318.8.