The sharemarket failed to capitalise on a two-day rally after big falls in commodity prices - sparked by negative comments about the state of the Chinese property market - reignited concerns about global growth.
The benchmark S&P/ASX 200 index fell 9.4 points to 4277.8, and the broader All Ordinaries Index was down 8.7 points at 4366.9.
Investors were uninspired by news that Greece's second bail-out package had been finalised, and that the European Financial Stability Facility planned to give the stricken country ?39.4 billion ($49 billion).
Instead, attention was focused on comments from the Chinese Premier, Wen Jiabao, who warned property prices in the world's third-biggest economy were "still far away from being reasonable".
The comments, which left the door open for further regulation of the Chinese housing market, pulled the floor from under local resource companies: they accounted for eight of the top 10 falls in index points.
The mining giant BHP Billiton slipped 43?, or 1.2 per cent, to $35.18, while Rio Tinto declined 37? to $64.93.
Gold, considered a store of value and a hedge against the falling value of paper currencies, slipped 3 per cent amid fading expectations of a third round of quantitative easing and a stronger US dollar.
Local gold stocks, including Newcrest, OZ Minerals and Kingsgate, were heavily sold. Newcrest, Australia's biggest gold miner, shed $1.03, or 3.3 per cent, at $30.27, OZ fell 27? to $10.06 and Kingsgate retreated 31?, or 4.5 per cent, to $6.58.
The iron ore miner Fortescue Metals gained 15? to $5.98 after it said Wednesday night's doubling of its bond offering meant it did not need to tap US debt markets again to help pay for its $US8.4 billion ($8 billion) iron ore expansion.
In the energy sector, Woodside was 21? softer at $35.38, Oil Search was down 14?, or 1.96 per cent, at $7 and Santos gained 1? to $14.58.
OneSteel rose 2.5? to $1.19, despite saying almost 60 jobs would be lost when it closes a manufacturing plant at Kembla Grange.
The retail sector had a mixed day, with Myer and David Jones stocks going in opposite directions. Myer shares shed 8?, or 3.4 per cent, to $2.29 after it announced a 17.5 per cent fall in first-half net profit, missing analysts' estimates. David Jones gained 3? to $2.78.
The Australian dollar hit a seven-week low against a resurgent greenback as falls in commodity prices and concerns about Chinese growth combined to push the currency lower.
David de Garis, a senior market economist at National Australia Bank, said surging bond yields and equity market performances in the US had weakened the local unit.
"We've seen US bond yields push up for the past couple of days and relative strength in equity markets over the past couple of days," he said.
At close, the dollar was trading at US104.5?.