THE sharemarket yesterday failed to capitalise on a two-day rally after big falls in commodity prices sparked by negative comment on the Chinese property market reignited concerns about global growth.
S&P/ASX 200 Index was down 9.4 points, or 0.2 per cent, at 4277.8.
Investors were uninspired by news that Greece's second bailout package had been finalised. Instead, attention focused on a warning by China's Premier, Wen Jiabao, that 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. BHP Billiton slipped 43?, or 1.2 per cent, to $35.18 while Rio Tinto fell 37? to $64.93.
Gold slipped 3 per cent on fading expectations of a third round of quantitative easing and a stronger US dollar. Local gold stocks, including Newcrest Mining, OZ Minerals and Kingsgate, were heavily sold.
Newcrest, Australia's biggest goldminer, shed $1.03, or 3.3 per cent, to $30.27, OZ Minerals, which also produces copper, fell 27?, or 2.6 per cent, to $10.06 and Kingsgate backtracked 31?, or 4.5 per cent, to $6.58.
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 iron ore production expansion.
In the energy sector, Woodside was 21? softer at $35.38, Oil Search was down 14?, or 2 per cent, at $7 and Santos gained 1? to $14.58.
Shares in steel maker OneSteel gained 2.5? to $1.19, despite its saying about 60 jobs would be lost when its closes a manufacturing plant at Kembla Grange to cut costs.
Retail was mixed. 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?, or 1.1 per cent, to $2.78.
The 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.
NAB senior market economist David de Garis said surging bond yields and equity market performances in the US had weakened the local unit. "Taken together, in the past, those factors would have taken investors away from the safe-haven currencies and towards the risk currencies such as the Aussie," he said.
The dollar closed at $US1.045.