Static retail trade figures eat into early gains

The market pared back early gains after data showed retail trade was a seasonally adjusted $20.933 billion in November, largely unchanged from the previous month and below forecasts of a 0.4 per cent rise.

Consumer discretionary stocks lost ground, followed by sectors deemed as riskier bets, such as energy and industrial stocks.

City Index analyst Peter Esho said the retail numbers were no surprise and some high street retailers might see "more revisions needed on the downside" in the near term.

Still, he added that with the sharp downturn in retail stocks in recent months, well-placed retailers could outperform in the coming earnings season.

Super Retail Group ended the day 2.2 per cent higher at $5.58 after it bucked the trend to report a 35 per cent rise in sales in the second half of 2011 to $758.6 million.

"We think even bad earnings numbers out in February and March might see cyclical retailers post gains in their share prices," Mr Esho said.

At the close, the benchmark S&P/ASX200 index was down 3.1 points at 4105.4, while the broader All Ordinaries was down 3 points at 4161.5. Dealers remained wary of putting money on the table ahead of the start of the US earnings season overnight.

Positive data from the US, including non-farm payrolls on Friday, have spurred gains this year as hopes have grown for the health of the world's largest economy.

But Bell Direct analyst Julia Lee said another meeting of European leaders later in the day has put the debt crisis at the front of dealers' minds. "We're seeing more risk aversion coming through as the focus turns back to Europe after good data from the US last week," she said.

BHP Billiton dipped 0.1 per cent lower to $35.20 and Rio Tinto shed 0.6 per cent to $62.15.

Spotless Group added 1.7 per cent to $2.37 after the industrial services firm said it would not accept an offer of less than $2.80 a share from its private equity suitor, Pacific Equity Partners.

PaperlinX shares ended 7.5 per cent lower as a battle between hybrid and equity shareholders threatened to scupper a takeover bid for the paper manufacturer.

The spot price of gold was $US1611 an ounce, down $US14.15.