Investors distracted by ongoing Greek crisis

The benchmark S&P/ASX200 shed 4.7 points, to 4262.7, while the All Ordinaries lost 3.3 points, to 4351.2.

CommSec market analyst Steve Daghlian said the local market had little to work with after a weak lead from US markets overnight.

The German parliament overwhelmingly approved a second loan package for Greece, but that was expected, Mr Daghlian said.

Mining and financial stocks, which represent about 60 per cent of the Australian market, were lower, with ANZ the weakest of the big four banks, down 20?, or 0.91 per cent, to $21.88.

NAB lost 20?, to $21.88. Commonwealth Bank lost 29? to $49.15, and Westpac shed 3? to $20.68.

Telstra shares rose 1.24 per cent, or 4?, to $3.27 after the competition watchdog approved plans to split the company in two.

The decision by the Australian Competition and Consumer Commission will allow Telstra to shut down its copper network and shift its 10 million customers, over the next decade, to the Labor government's $36 billion national broadband network.

Richard Morrow, the director of EL&C Baillieu Stockbroking, said the decision was a "huge landmark" that put "a lot of confidence back into the Telstra market". The decision helped lift the telecommunications sector, which rose 0.59 per cent.

Mining giant BHP Billiton was 7? softer at $35.75, while Rio Tinto gained 30? to $67.70.

This reporting season has seen "cyclical" stocks, which rise and fall with economic growth, significantly re-rated to represent the pick-up in domestic economic activity.

As the financial house Goldman Sachs points out, large cap industrials with exposure to domestic conditions are up about 18 per cent since January 1, outperforming defensive stocks by 15 per cent.

That has given some of Australia's retailers cause to cheer, with the industry enjoying a decent rally in February, due largely to the cyclical bounce over summer, the chance of rate cuts, and the prospect of further mergers and acquisitions (such as Billabong).

Over the past seven weeks, retailers Harvey Norman (up 12.2 per cent), Myer (up 16 per cent), and the Reject Shop (up 14.5 per cent), have risen substantially. And Kathmandu, the hiking and outdoors retailer, has had its second-best monthly rise since listing on the Australian Securities Exchange in November 2009.

Up 18.9 per cent since February 1, the company has managed to claw back some losses from the preceding three months (-1.8 per cent in November, -29 per cent in December, and -3 per cent in January).

When it had its last profit warning, in December 2010, Kathmandu's shares bottomed out at $1.20. Yesterday its share price closed at $1.51.

Still, fund managers warn the rally needs to be put into context. "The whole sector is coming off a very low base," the head of research at ATI Asset Management, David Liu, said.

"Even though you've had this pretty significant relative outperformance over the February period... Over the six or 12 months leading up to February, it's one of the worst performed sectors in the market."