THE sharemarket ended lower for the third straight day yesterday as investors took profits in the run-up to the reporting season and after one of the best monthly starts to the calendar year in four decades.
At the close, the S&P/ASX 200 Index was down 37 points, or 0.9 per cent, at 4225.7. The market opened weaker on disappointing US business and confidence data.
Government data showing Australian house prices plunged 4.8 per cent in 2011 added to the muted tone in markets as investors continued to fret about the ongoing debt crisis in Europe.
"It's no surprise we're seeing this weakness as it's the first of the month," said CommSec market analyst Juliette Saly.
"We outperformed other markets in January, so we're seeing profit-taking coming through now."
Resources stocks were the day's worst performers, shedding 1.3 per cent despite Chinese data showing that its manufacturing sector expanded faster than analysts expected.
BHP Billiton ended down 57? at $36.91, while Rio Tinto dropped 42? to $68.74.
Among the day's biggest losers was Energy Resources Australia, which slumped 21?, or 13.6 per cent, to $1.33 after it reported a $153.6 million loss for 2011.
Telstra dropped 3? to $3.30 after a court ruling in favour of Optus that saw Australia's largest telecoms operator lose its $153 million deal to show games exclusively on its mobile phones.
Building materials maker Boral closed down 6?, or 1.5 per cent, to $3.98 after it announced it had sold its Indonesian business for $US135 million and confirmed its previous expectations for the half-year profit.
Woolworths closed down 9? at $24.70 while Wesfarmers, which owns rival Coles, eased 59? to $29.71, with its second-quarter sales due today.
Austock Securities senior client adviser Michael Heffernan said he expected the sharemarket to resume its recent bullish trend when the earnings season began next week.
"We'll start to see the big guns firing very soon," he said. "I think expectations have been lowered to such an extent that if we get anything reasonable it will see us push higher."
The day's top performer was Fairfax, which jumped 7.5?, or 10.1 per cent, to 81.5? after reports emerged that Gina Rinehart, Australia's richest woman, had increased her stake in the newspaper publisher.
The spot price of gold was up US79? at $US1737 an ounce at the close of trade.