Ground lost on unease at China slowing

A fall in the value of the dollar it slid to a two-month low below $US1.04 did help local companies with overseas earnings.

But much of the week was dominated by mining or resource-related news.

For the week, the benchmark S&P/ASX 200 Index lost 5.75 points, or 0.1 per cent, to 4270.4.

With concerns about Greece fading, comments from International Monetary Fund managing director Christine Lagarde that the US and European financial systems looked slightly healthier, gave investors confidence that things were improving.

But they reacted harshly to news that BHP Billiton iron ore division president Ian Ashby said growth in Chinese demand appeared to be "flattening", but that the company remained confident in the long-term demand for commodities generally.

Resource stocks were sold down from Tuesday, when the news broke, with the materials sub-index slipping 1.77 per cent through the week, the worst sector overall.

A watered-down version of the federal government's mining tax passed into law, affecting the so-called "super profits" of the country's iron ore and coal miners. Fortescue Metals said it would take the matter to court.

HSBC's preliminary purchasing managers index showed manufacturing activity in China slipping for the fifth month in a row.

Investors further reduced their exposure to resource stocks.

Yesterday, BHP Billiton was down 40?, or 1.2 per cent, at $34.40, Rio Tinto gave up 97?, or 1.5 per cent, to $63.70 and Fortescue Metals Group slipped 8?, or 1.3 per cent, to $6.

Sands miner Iluka dropped 55?, or 3.2 per cent, to $16.90.

Australia's largest goldminer, Newcrest, backtracked 35?, or 1.2 per cent, to $29 after a substantial shareholder reduced its stake by more than 1 per cent.