The sharemarket fell after early gains on strong US jobs data and investors took profits in the big four banks and Telstra.
The benchmark S&P/ASX 200 Index lost 13.6 points, or 0.3 per cent, to 5387.1, while the broader All Ordinaries index fell 13.6 points, or 0.3 per cent, to 5380.8.
The better than expected US jobs data sparked speculation that the Federal Reserve might begin reducing the $US85 billion in monthly asset purchases it is making to stimulate economic growth before the end of 2013, which boosted the greenback.
At the local close, the dollar was buying US93.82¢ from US94.64¢ at Friday's close.
"A sell-down in the Aussie dollar may have prompted some selling by offshore investors in the banks and Telstra," Patersons Securities head of strategy Tony Farnham said.
The biggest laggard was ANZ, down 1.7 per cent to $32.14, followed by Commonwealth Bank, which lost 1 per cent at $78.35. National Australia Bank fell 0.6 per cent to $34.56, while Westpac finished down 0.2 per cent at $33.12.
Telecommunications was the worst-performing sector, down 0.8 per cent, as Telstra fell 0.8 per cent to $5.14.
Wesfarmers, owner of Coles, will temporarily trade under two tickers as it completes a capital distribution. Rival Woolworths lost 0.6 per cent to $34.54.