The sharemarket fell as a key measure of domestic consumer confidence weakened, with already shaky sentiment taking another hit when Holden confirmed it would cease local production in 2017.
The benchmark S&P/ASX 200 Index fell 39.4 points, or 0.8 per cent, to 5104.2, posting its fifth straight day of losses. The broader All Ordinaries Index shed 36.7 points, or 0.7 per cent, to 5109.5.
Local shares had a soft start after equity markets in the US closed lower as speculation built that the Federal Reserve might vote to start reducing quantitative easing at next week's meeting. The beginning of "the taper" is expected to prompt a spike in the US dollar and a fall in global equities.
BHP Billiton and the big four banks led the local losses. Healthcare was the worst-performing sector, down 1.1 per cent as exchange rate-sensitive exporters dipped. Vaccine maker CSL dropped 1.1 per cent to $66.34.
Metals and mining stocks were mostly lower, despite the spot price of iron ore, landed in China, holding steady at $US139.40 a tonne.
BHP Billiton fell 1.7 per cent to $36.18, while Rio Tinto lost 0.6 per cent to $65.77.
One of the biggest coalminers on the market, Yancoal, jumped 9.9 per cent to 72¢ as Treasurer Joe Hockey relaxed the foreign ownership rules applied to Yancoal's Chinese parent company, Yanzhou. Whitehaven Coal lost 5.7 per cent to $1.82.
Copper miner OZ Minerals was the worst-performing stock, plummeting 14.2 per cent to $2.65 after it provided a gloomy update on the prospects of its flagship mine in South Australia.
A weaker US dollar pushed capital into gold, boosting the spot price to $US1260.04 an ounce, its biggest jump since mid-October. Gold stocks were among the best performers, led by Resolute Mining, up 22.35 per cent to 52¢. Newcrest Mining also rallied, up 8 per cent to $7.55.
The Westpac-Melbourne Institute index of consumer confidence fell 4.8 per cent from a near-three-year high of 110.3 points in November to a five-month low of 105 points in December. The index is still up 5 per cent over the year.
QBE rebounded 1.8 per cent to $11.01, as some analysts started to upgrade their recommendations on the stock. Qantas also rallied 2.6 per cent to 99¢.