THE sharemarket ended flat after disappointing jobs data wiped out an early 1 per cent gain flowing from strong performances overseas.
Brokers said hints of a possible labour shortage in China, Australia's biggest trading partner, and nervousness before a slew of earnings reports from Wall Street also helped to undermine the market.
"We ran out of puff partly due to the jobless figures and some press hints of labour shortages from China," said Ord Minnett stockbroker Jon Hancock.
Official figures yesterday showed Australia's unemployment rate last month was flat at 5.2 per cent, below analysts' forecasts that the job market would add 5000 new positions.
At the close, the benchmark S&P/ASX 200 Index was down
3.1 points at 4214.8.
Financial stocks finished lower after investors turned sour on the sector following a string of profit downgrades from insurers this month. QBE shed 28?, or 2.4 per cent, to $11.20, Suncorp lost 14?, or 1.7 per, to $8.15 and Wesfarmers, which has a big insurance arm, ended down 11?, or 0.4 per cent, at $30.37.
The big four banks largely shrugged off concerns that high funding costs and slower growth were likely to squeeze their margins in 2012.
"We have been in, and still remain, in a slower credit environment for the Aussie banks," said Cameron Securities client adviser Adrian Leppinus.
Westpac was up 3? at $20.60, Commonwealth down 4? at $49.80, NAB 22? stronger at $23.88 and ANZ firmed 3? to $20.82.
Market-beating results from Woodside Petroleum and Santos did little to help the energy sector, which closed down 0.4 per cent. Woodside lost 63?, or 1.9 per cent, to $33.48 despite beating full-year production forecasts, and Santos edged up 4? to close at $13.25.
Beach Energy bucked the trend to close up 3.5?, or
2.6 per cent, at $1.405 after it renegotiated a royalty agreement with Exxon Mobil subsidiary Esso Australia.
The resource sector was one of the few bright points, rising 0.7 per cent after strong production results from several top miners.
BHP Billiton closed up 34?, or 0.9 per cent, at $37.34, Rio Tinto rose 15? to $66.75 and Fortescue Metals moved up 1? to $5.06.
Lynas Corp was one of the strongest performers, closing up 9?, or 8.5 per cent, at $1.15 after Malaysia's Trade and Energy Minister, Mustapa Mohamed, said the country's cabinet would soon decide on granting the company a licence to refine rare earths in Malaysia.
Spot gold closed up $US8.72 at $US1663.37 an ounce.