THE sharemarket closed lower yesterday, with mining stocks suffering heavy falls as investors fretted over fresh signs of a slowing Chinese economy.
The benchmark S&P/ASX 200 Index closed down 20.7 points, or 0.48 per cent, at 4254.3.
The market followed overseas markets down and also lost ground after base metals prices and the dollar fell in overnight trading.
BHP Billiton earlier this week warned that Chinese demand for iron ore was flattening, sending a shiver through world markets.
IG Markets market strategist Stan Shamu said he believed traders in Asia were seeing the situation in a slightly more rational light.
He said BHP Billiton, Rio Tinto and Fortescue Metals were still spending vast sums to increase production of iron ore by hundreds of millions of tonnes a year.
"The market's looking very toppy at the moment, at the stage where investors think, 'How much longer can we keep this run going?"' Mr Shamu said. "US markets are at four-year highs. That's a big run-up considering we're only three months into the year. Investors were bound to get sceptical at these levels."
Gold, materials and metals and minerals stocks were the worst performers. BHP Billiton closed 61?, or 1.7 per cent, down at $34.70 while Rio Tinto sagged 27? to $65.34.
Negative sentiment was heightened by a poor first-half financial result from department store operator David Jones. That had instilled fears for investors that the sector was going to be in trouble for a long time if giants such as David Jones needed to make drastic changes in strategy, Mr Shamu said.
David Jones shares fell 30?, or 11 per cent, to $2.43 after warning that its full-year profit would drop by up to 40 per cent. Myer Holdings dipped 2? to $2.24. Outdoor equipment and clothing retailer Kathmandu slumped 24?, or 16.1 per cent, to $1.25 after posting a 43 per cent slump in first-half profit. Oroton Group fell 32? to $8.70 despite increasing its first-half profit by 4 per cent.
Packaging company Amcor rose 6? to $7.03 after it paid $19.8 million to acquire flexible packaging business Uniglobe of India.
Sigma Pharmaceuticals was among the best on the ASX 200, rising 3?, or 5 per cent, to 61.5? before its full-year earnings result this week.
National Australia Bank was 10? lower at $24.10, ANZ shed 11? to $22.42, Westpac eased 15? to $21.05 and Commonwealth Bank offloaded 27? to $48.63.
Market turnover reached 1.94 billion shares, worth $4.28 billion, with 442 stocks up, 545 down and 401 steady.