THE sharemarket pared earlier gains to close slightly lower yesterday.
Traders said heightened expectations that the Reserve Bank would cut interest rates next month were offset by data showing a fall in direct foreign investment in China.
The S&P/ASX 200 Index finished down 13.5 points, or 0.3 per cent, at 4288.8.
IG Markets analyst Stan Shamu said the release of the RBA's April 3 board meeting minutes, which showed the central bank was open to a cut in the cash rate, helped lift the market.
"That was pretty positive for markets but quite negative for the Aussie dollar, which lost some ground following that," he said.
However, the announcement of a drop in China's direct foreign investment figures caused falls for Australian resource companies.
"We saw foreign direct investment figures fall about 2.8 per cent for the quarter, which was quite negative for markets because it showed there might be a drop in confidence in the Chinese economy," he said. "We have seen most of the miners come off because of that."
The trading session opened positively following strong earnings results and economic news from the US. The US Commerce Department reported retail and food service sales expanded by a better than expected 0.8 per cent in March.
Rio Tinto finished down 49?, or 0.75 per cent, at $64.70. The company said output across its New South Wales and Queensland coalmines had been affected by wet weather in the March quarter but production of key commodities had increased.
BHP Billiton closed 16?, or 0.5 per cent, lower at $34.15, and iron ore miner Fortescue Metals was off 6? at $5.79.
There were some gains across the healthcare sector, with CSL up 60? at $36.87.
Shares in Telstra dipped 1? to $3.36 a day after it announced it would outline
a massive restructure of its workforce by the end of the month as it switched from the ageing copper network to the national broadband network.
The spot gold price, which early on Friday reached $US1680 an ounce, was $US1646.73 at the close yesterday, up $US4.28 on the day.
Goldminer Newcrest lost 10? to $28.35.
National turnover was 1.75 billion shares worth $3.82 billion, with 362 stocks up, 587 down and 398 unchanged.
The dollar edged lower to $US1.0314 from Monday's close of $US1.0327. Analysts said the market would be awaiting German economic confidence data for April overnight.