Concerns over Europe's woes trim early gains

"Risk assets continue to trade cautiously on the slight chance that the result out of Greece comes in contrary to expectations," the IG Markets strategist Stan Shamu said. "Such an event could result in a swift retreat in risk assets after the recent strong run."

He said negotiations between Greece and its creditors kept investors nervous despite a positive session in Europe that buoyed sentiment.

At the close, the benchmark S&P/ASX200 index was down 0.9 points at 4224.2 while the broader All Ordinaries fell 1.2 points at 4286.4.

Volumes were light across Asia amid the Lunar New Year holiday. Turnover was 1.63 billion shares worth $3.27 billion - below the average turnover of around $3.8 billion.

Resources were down 0.3 per cent, healthcare shed 1.2 per cent and technology stocks ended down 0.8 per cent, marking the second straight day of losses. Retailers also eased as investors mulled gloomy forecasts for the earnings season.

Surfwear retailer Billabong was the largest loser in the consumer discretionary sector, shedding 6.1 per cent to $1.865 gaining sharply on Monday after rumours it could be a target for a private equity buyout.

Materials closed lower, led by a 16? loss to $37.08 from the bourse's largest stock, BHP Billiton.

Australia's largest goldminer, Newcrest, rose 64? to $32.84 after its production results met market expectations.

Energy stocks rose after news that the European Union embargo on Iranian exports sent oil prices surging to nearly $US100 a barrel.

Shares in AWE rose 3? to $1.485 at after the energy explorer said it may sell about 50 per cent of an oil project in Indonesia to help fund a $US600 million ($571 million) expansion across Australia, New Zealand and other parts of Asia.

Oil Search rose 18? to $6.84 after it reported a 26 per cent rise in revenue for the year to December 31 to $US732.9 million, thanks to higher oil prices.

Takeover target Spotless rose 7? to $2.38 after the union representing 4000 of its members blasted the cleaning company's board for not accepting a $711 million offer from suitor Pacific Equity Partners.