Investors kept one eye firmly on Europe this week, and the other on China, while welcoming further good news from the US.
An update on the state of the local jobs market, which showed signs of weakness, was meanwhile absorbed with little fuss.
Economists warned the Reserve Bank risked falling behind in its management of the economy if the labour market deteriorated further.
Despite the unemployment rate creeping up to 5.2 per cent last month from 5.1 per cent the month before, Australia now has the highest benchmark interest rate in the developed world, at 4.25 per cent.
But investors seemed more concerned about the same big stories: Greece and the euro debt crisis, the state of the US economy and prospects for slower economic growth in China.
On the face of it, they seemed unhappy with the sum of things.
The benchmark S&P/ASX200 index, which comprises the largest 200 listed companies on the Australian Securities Exchange, slipped 61.1 points during the week, or 1.5 per cent, at 4212.
After closing the previous week on 4273.1 points, the local sharemarket fell more than 3 per cent in the first three days of the week as market-watchers digested news that Chinese authorities had reduced their goal for economic growth, planning now to let their economy grow by 7.5 per cent this year, rather than 8 per cent.
Market giants BHP Billiton and Rio Tinto, whose fortunes are welded to global growth, thus took a swipe to the chest. For the week, BHP was down 98? at $34.71, while Rio Tinto fell $1.80 at $64.13.
But John Abernethy, the director of Clime Asset Management, said concerns about Chinese growth were overblown.
"If investors are worried about China [the world's second-biggest economy] growing at 7.5 per cent and not 8 per cent, why are they not worried about Japan, which is the third-biggest economy, going backwards?" he said. "It's a mindless discussion."
But the sharemarket rebounded on Thursday morning thanks to a positive lead from US markets overnight, after new data showed US private-sector jobs increased by 216,000 last month.
The positive sentiment was boosted further by hopes Greece was unlikely to default on its debts in the near term, on indications the country had achieved enough bondholder support for a crucial debt swap.
At the close yesterday,with S&P/ASX200 up 41 points, or 0.98 per cent, at 4212, the broader All Ordinaries index was up 38.3 points, or 0.9 per cent, at 4300.5.
Gains were across the board, except in the information technology sector, with the materials sector jumping 1.9 per cent, energy stocks gaining 1.7 per cent and financials adding 0.7 per cent.
The gold sub-index rose 3.1 per cent, while IT fell 0.5 per cent.
The big four banks were all firmer yesterday, with Westpac the top gainer, rising 28?, or 1.37 per cent, at $20.69.
ANZ left its variable interest rates unchanged after its monthly review yesterday. Its shares finished 14? firmer at $21.93.
Australia's biggest insurer, IAG, rose 9?, or 2.8 per cent, to $3.29 after it confirmed it would cut 600 jobs in the next three years as part of a restructure of its CGU business.
Qantas dropped 4.5?, or 2.61 per cent, to $1.68 after its plans for a new premium airline in Asia were in jeopardy after talks with Malaysia Airlines ended without a deal.
OZ Minerals put on 27?, or 2.7 per cent, to $10.19. OneSteel, both an iron-ore miner and steelmaker, was up 3?, or 2.9 per cent, at $1.05.
For the week, the Australian dollar slipped more than US1? lower against the greenback.
At 5pm yesterday, it was US106.47?, down from US107.81?.