Commodities weigh market down

The sharemarket finished lower as weaker commodity prices weighed on the biggest mining stocks.

The benchmark S&P/ASX200 Index closed 26 points, or 0.5 per cent, lower at 5165.7, while the broader All Ordinaries Index was down 29.1 points, or 0.56 per cent, at 5144.2.

RBS Morgans director of equities Bill Chatterton said big mining companies suffered the largest falls while the rest of the market was peppered with varying results.

"The local market is mixed on a whole range of areas and we've pulled back into the defensives," Mr Chatterton said. "Tuesday's budget didn't really do anything for investor confidence so we are taking our cues from overseas."

Among the big mining houses Rio Tinto shed $1.09 to hit $54.68 while BHP Billiton lost 27¢ to touch $33.76. Gold miner Newcrest fell 5.3 per cent to settle at $15.02 following a sharp drop in gold prices. Gold closed at $US1391.5 an ounce in Sydney, down $US23.39.

Three of the big four banks finished in negative territory, with only Commonwealth Bank going forward, gaining 18¢ to $73.83.

National Australia Bank fell 2¢ to $33.05, ANZ fell 12¢ to $29.86, and Westpac lost 27¢ to $31.40.

Among the defensive stocks, Wesfarmers jumped $1.40 to $44.20 while Woolworths rose 32¢ to $34.71.

GrainCorp shares were flat at $12.75 after it announced its first-half profit had fallen by 34 per cent due to purchases of several food companies. Australia's largest grain handler is working with US food company Archer Daniels Midland on a $3 billion-plus takeover.

Meanwhile, the dollar hit a fresh 11-month low as investors continued to pile onto its US counterpart.

The dollar fell to US98.28¢ during Thursday's afternoon session, a level not seen since last June.

By the close of local trade it had recovered a little and was trading at US98.37¢. It has now dropped about US4¢ in the past week.

Easy Forex senior currency dealer Francisco Solar said the dollar pushed below a key support level late, meaning it could fall further during overnight trade.

He said the main reason for the weakness was a surge in demand for the US dollar, though falling commodity prices and last week's RBA interest rate cut were also weighing it down.