Banking sector, jobs data pull shares lower

The sharemarket closed lower on Thursday as two of the big four banks traded ex-dividend and weak employment figures dampened investor sentiment.

The benchmark S&P/ASX 200 index shed 11.8 points to 5422, after the market opened lower despite strong offshore leads.

"Australian equities are likely to post a positive return over the remainder of 2013 and maybe into early 2014 but after that there are plenty of risks," Colonial First State senior investment manager Peter Dymond said.

"We are concerned about the US Federal Reserve starting to reduce its stimulus before gross domestic production has risen sufficiently and markets reacting badly.

"Other known risks ... next year include a credit crisis and implosion of the shadow banking sector in China, sovereign debt issues in Europe, and a global oversupply of iron ore.

"But if the US, Europe and China remain stable, there is the potential for the Australian equity market to post returns up to 10 per cent in 2014."

Financial services was the worst-performing sector on Thursday, down 0.7 per cent, as ANZ, National Australia Bank and Bank of Queensland traded ex-dividend. NAB fell 0.7 per cent to $34.68, ANZ 1.6 per cent to $32.38, and BoQ 0.8 per cent to $11.95. Westpac fell 0.5 per cent to $34.23, before going ex-dividend on Friday. CBA rose 1.7 per cent to a record $79.32, and Macquarie 2.6 per cent to $54.60.

Perpetual portfolio manager Vince Pezzullo said the banks "are priced to perfection and there are better opportunities in other parts of the market".

BHP rose 0.4 per cent at $38.24, while Rio fell 0.2 per cent to $65.48 and Fortescue 2.4 per cent to $5.70, despite the spot price for iron ore edging higher.

The gold spot price fell 0.1 per cent to $US1317.30 an ounce at the local close. Junior goldminer St Barbara slumped 15.7 per cent to 35¢, after Moody's downgraded its credit rating.

Ausdrill was the worst hit, losing 28.7 per cent at 98¢, after issuing a profit warning for next year due to lower demand from the mining industry for its drilling services.

Other big companies that dragged the market down included Orica, which fell 2.2 per cent to $19.95, and Coca-Cola Amatil, down 2.3 per cent at $11.97.