Profit-takers pinch market on first of the month

At the close yesterday, the benchmark S&P/ASX 200 index was down 37 points, or 0.9 per cent, at 4225.7, while the broader All Ordinaries fell 34.7 points, or 0.8 per cent, to 4291. The March share price futures contract was down 37 points at 4189.

Despite the falls this week, the Australian equities market added about $65 billion in value in January.

The market opened weaker after disappointing US business and confidence data weighed on commodities and dragged down local shares.

Government data showing Australian house prices fell 4.8 per cent last year added to the muted tone 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," a CommSec analyst, Juliette Saly, said. "We outperformed other markets in January, so we're seeing profit-taking."

Resources stocks were the day's worst performers, shedding 1.3 per cent, despite Chinese data showing the manufacturing sector in Australia's largest trading partner expanding faster than expected. BHP Billiton ended down 57? at $36.91 while Rio Tinto dropped 42? to $68.74.

Among the day's biggest losers was uranium miner Energy Resources Australia, which slumped 21?, or 13.6 per cent, to $1.33 after it reported a $153.6 million loss last year.

Telstra dropped 3? to $3.30 after a court court ruling in favour of rival Optus that saw Australia's largest telecoms operator lose its $153 million deal to show games exclusively on its mobile phones.

The building materials maker Boral fell 22?, or 2.5 per cent, to $8.68 after it announced it sold its Indonesian business for $US135 million ($127 million) and confirmed its expectations for half-year profit.

Woolworths closed down 9? at $24.70 while Wesfarmers, which owns rival Coles, eased 59? to $29.71 ahead of its second-quarter sales due out today.

An Austock Securities adviser, Michael Heffernan, said he expected the market 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 Media (publisher of the Herald), which added 7.5?, or 10.1 per cent, to 81.5? after reports Gina Rinehart, Australia's richest woman, attempted to boost her stake in the company.