Holidays keep big fish from biting

Just $2.65 billion worth of trades were recorded on the ASX200 - the only day the market performed worse this year was January 2, at $1.8 billion.

Analysts said investors were cautious before today's crucial inflation data, but the midweek holiday had scared off the large institutional investors, which kept the bigger trades away.

"This week will be another write-off," Goldman Sachs's Richard Coppleson said, "but [after] this week we should slowly see things pick up."

The benchmark S&P/ASX200 index closed down 14.1 points, or 0.3 per cent, at 4,352.4, while the broader All Ordinaries index similarly fell 14.1 points, or 0.3 per cent, to 4,430.3.

The positive leads from Wall Street and European markets on Friday failed to prevent the local bourse losing ground, with most sectors performing poorly. The falls were led by the materials sector, which ended 0.7 per cent lower, while industrials dropped 0.6 per cent, financials ended flat, and telcos rose 0.6 per cent.

But pockets of strength could be still found in higher-yielding, dividend-paying sectors, including telcos and financial stocks. Commonwealth Bank was up 1? at $50.95, ANZ gained 1? to $23.46 and Westpac gained 4? to $22.14. NAB slipped 11? to $25.08.

Telstra gained 2? to $3.40.

Investors were looking to crucial inflation data to be released today. Analysts forecast the key measure of underlying inflation rose 0.6 per cent in the first quarter, nudging the annual rate down to 2.4 per cent and comfortably within the RBA's long-term target band of 2 to 3 per cent.

"We could see a rally" if the March-quarter consumer price index data comes within expectations, said the Macquarie Equities division director Lucinda Chan.

The Reserve Bank has already indicated it would consider cutting the 4.25 per cent cash rate at its next policy meeting on May 1, providing inflation numbers were tame.

Producer price data released yesterday supported the case for monetary easing, showing the prices of final goods dropped 0.3 per cent in the March quarter, well below analyst forecasts for an increase of 0.5 per cent.

Shares in the diversified conglomerate Wesfarmers slipped 13? to $29.34 after analysts reported that third-quarter sales at its Coles supermarket unit could fall short of rival Woolworths, as shelf prices continue to fall amid heavy discounting.

BHP Billiton was down 18? at $35.32, while Rio Tinto gained 2? to $66.65 and fellow miner Fortescue Metals fell 6? to $5.92.Shares in Spotless Group advanced 2.5 per cent to $2.46 after the business services group said it was still talking with suitor Pacific Equity Partners and was yet to reach a conclusion.