Lustreless market maintains steady pulse

The sharemarket flatlined, managing to post just its fourth straight day of gains, as concerns about a global slowdown in mining weighed on investors.

The benchmark S&P/ASX 200 Index reversed early losses to firm 0.5 points, or 0.01 per cent, to 5035.6 points, thanks to a late rally by the big banks.

Materials stocks generally were weaker. Rio Tinto shed 18¢, or 0.3 per cent, to $57.50, while BHP Billiton, after an initial 1.2 per cent dip, clawed back losses to finish up 4¢, or 0.1 per cent, to $34.77.

Arab Bank Australia treasury dealer David Scutt attributed the materials sector's lacklustre performance to Caterpillar posting a 43.5 per cent drop in quarterly profit, which was $US960 million, or $US1.45 a share, down from $US1.70 billion, or $US2.54 a share, a year earlier.

The American company is the world's biggest maker of mining and construction equipment, hence a barometer of the strength of global mining activity, which was rattled after the release of weak manufacturing data from China on Wednesday.

Newcrest Mining shares fell 16¢, or 1.3 per cent, to $12.53 after it forecast a flat year ahead.

Smaller operator St Barbara lost 13.5¢, or 20.8 per cent, to close at 51.5¢, having announced gold operations in the Pacific failed to meet expectations for the year.

Amid the bleak forecasts there was a flicker of light. The economy of Australia's fourth-biggest trading partner, South Korea, grew at its fastest pace in two years, expanding 2.3 per cent in the June quarter compared with the same period last year, and accelerating from its 1.5 per cent gain in the first quarter. But the risks of a slowing Chinese economy linger.

"In terms of South Korea's importance to Australia's economy, roughly about 5 or 6 per cent of our international trade is via them," Mr Scutt said.

"But, especially at the moment with Australia, is everything is front and centre with China. That takes precedence over all others at the moment. None of the backward looking or forward looking data looks like anything spectacular in this point in time."

Of the big banks, Commonwealth led the charge, up 62¢, or 0.9 per cent, to $73.52. Westpac was next, firming 31¢, or 1 per cent, to $30.06. NAB was 20¢, or 0.7 per cent, higher at $30.87, and ANZ advanced 14¢, or 0.5 per cent, to $29.12.