Market sits tight awaiting Bernanke report

The sharemarket closed slightly lower as investors waited for an update on economic stimulus from the US's top central banker.

At the close, the benchmark S&P/ASX 200 Index was down 4.3 points at 4981.7, while the broader All Ordinaries dipped 2.1 points to 4966.5.

A strong production report from BHP Billiton boosted sentiment in the resource sector, but that was offset by losses in other sectors.

Activity was muted as investors waited for Federal Reserve chairman Ben Bernanke's scheduled testimony to US Congress early on Thursday, CMC Markets senior trader Tim Waterer said.

"Traders appear to have hit the snooze button on the Australian market today, with the ASX 200 index flat-lining ahead of the key Bernanke testimony," he said.

BHP's annual production report showed higher than expected output of iron ore, and that followed Rio Tinto's better than expected first-half production report on Tuesday.

"Results from the bellwether miners in the past couple of days has helped to shore up some confidence in the materials sector, with the Rio and BHP production numbers helping offset lingering Chinese growth concerns," Mr Waterer said.

BHP shares gained 76¢, or 2.3 per cent, to $34.19 and Rio shares added 63¢, or 1.1 per cent, to $56.15. Fortescue Metals was 21¢ higher at $3.71, while Iluka gained 49¢, or 4.7 per cent, to $10.91 after it issued a positive outlook for the mineral sands market.

The financial sector lost ground, as did property owners. ANZ was the worst of the banks, down 35¢ to $28.80. Macquarie Group fell 77¢ to $44.33, while in the property sector, Westfield Group shed 12¢ to $11.33 and GPT dropped 8¢ to $3.71.

Telstra also lost ground, down 3¢ to $4.83.

The dollar edged higher before Dr Bernanke's appearance. Late on Wednesday it was buying US92.08¢, up from Tuesday's US91.82¢.

Traders were reluctant to sell the currency before Dr Bernanke's semi-annual appearance before an economics committee.

ANZ foreign exchange strategist Andrew Salter said Dr Bernanke was likely to reiterate his view that quantitative easing would not be unwound until the Fed's Federal Open Market Committee is convinced the economy is on the mend. Any comment supporting stimulus would cause US dollar weakness.