The sharemarket finished lower as investors sold off mining stocks due to weaker commodity prices.
At the close of trade the benchmark S&P/ASX 200 Index was 38.3 points, or 0.78 per cent, lower at 4888.3, while the broader All Ordinaries was down 40.3 points, or 0.82 per cent, at 4873.7.
IG markets analyst Evan Lucas said the big miners suffered as the price of iron ore continued to fall.
"The falls at Rio and BHP have got faster as iron ore continues to slide and there's a bit of a rotation out," Mr Lucas said.
"It's been unfortunately a bit of a disappointing afternoon and we're back to a level that we saw at the start of the morning."
The decline came despite the banks receiving a bounce in the wake of last week's falls.
Trading opened on a negative note as investors took their cues from a poor finish on Wall Street on Friday and lower commodities prices during weekend offshore trading.
Better than expected manufacturing data from China published over the weekend was hoped to give the local market a boost. But the data and stronger local retail data was not enough to stem the losses.
Materials stocks were down significantly, with BHP falling 79¢ to $34.09 and Rio off $1.38 at $53.80. Fortescue Metals lost 9¢ to $3.26.
Australia's big four banks were in positive territory. ANZ was up 31¢ at $27.85, CBA climbed 6¢ to $66.92, NAB advanced 30¢ to $29.30 and Westpac was 56¢ higher at $29.
Shares in Cochlear tumbled after the hearing implant maker reported slowing growth in 2013. Cochlear was down $11.66, or 18 per cent, at $52.88.
Also well down was waste management company Transpacific, which announced the resignation of its chief executive and downgraded profit estimates for 2012-13. Transpacific was down 10.5¢, or 11.8 per cent, at 78.5¢.
Australian bond futures prices have pushed lower, even though most of the economic data released on Monday was weaker than expected.
Late on Monday, the June 10-year bond futures contract was trading at 96.575 (implying a yield of 3.425 per cent), down from 96.635 (3.365 per cent) on Friday. The three-year contract was at 97.36 (2.64 per cent), down from 97.4 (2.6 per cent).
UBS interest rate strategist Andrew Lilley said the market was awaiting the Reserve Bank's interest rate decision, due out on Tuesday afternoon.
The RBA is widely expected to keep the cash rate unchanged at 2.75 per cent after reducing it by a quarter of a percentage point at the May board meeting.
A major factor that would keep the rate on hold is that the Australian dollar fell 7 per cent in May.