The sharemarket ended lower as investors fretted over an imminent end to the US Federal Reserve's stimulus program and digested a flood of local earnings.
But better-than-expected manufacturing data from China helped the market lift from the session's lows. HSBC's flash purchasing managers index showed Chinese manufacturing hit a four-month high in August.
The benchmark S&P/ASX 200 Index lost 24.3 points, or 0.5 per cent, to 5075.7, after earlier falling as low as 5028, while the broader All Ordinaries Index slid 23.6 points, or 0.5 per cent, to 5066.7.
Falls were led by the materials sector (down 0.8 per cent) and financials (down 0.4 per cent), while consumer discretionary stocks edged up 0.2 per cent.
Local investors also had to digest a flood of earnings, with more than 20 companies reporting.
Amid a mixed bag of results, the standout was Fortescue Metals, IG Markets analyst Chris Weston said. The miner posted a higher-than-expected net profit of $US1.74 billion and surprised its shareholders with a 10¢ fully franked dividend. Fortescue shares rallied on the result, jumping 4.2 per cent to $4.26.
The result did not help lift the other miners, with BHP falling 1 per cent to $35.37 and Rio losing 0.9 per cent to $59.04.
Among other companies reporting, IAG shares fell 2.2 per cent to $5.80, Origin Energy rallied 5.8 per cent to $12.98 and Pacific Brands slumped 7.6 per cent to 79¢.
Australia's biggest goldminer, Newcrest, fell 1 per cent to $12.40, after the metal's price slipped overnight, taking a break from its recent rally.
The big banks ended mixed: CBA and NAB rose 0.2 per cent and 0.6 per cent respectively, while ANZ and Westpac fell 0.8 per cent and 0.9 per cent.
The Chinese manufacturing data also boosted the dollar, which was fetching US89.9¢ in late trade after plunging as low as US89.32¢ in the wake of the Fed minutes.
The currency is still showing a loss of more than 2 per cent since Monday against its US counterpart and is at three-year lows versus the pound.
"The Aussie will stay heavy and I don't see it trading back above US90.50¢. Anywhere near that level, it's going to be sold," said a trader at a European bank in Singapore. BusinessDay