THE stockmarket closed weaker as declines among the major miners dragged the broader market lower and snapped a two-day rally.
The benchmark S&P/ASX 200 index was down 16.9 points, or 0.36 per cent, at 4723.8, while the broader All Ordinaries fell 18.5 points, or 0.39 per cent, to 4742.9.
The market opened down about 0.3 per cent, following a disappointing night on Wall Street as investors reacted negatively to news that the US central bank may consider ending its quantitative easing earlier than expected.
After the poor start, local stocks remained stuck in red figures but held their ground to trade in a tight range throughout Friday's session, ending a two-day rally that had pushed the S&P/ASX 200 to a 19-year high.
CMC Markets chief strategist, Michael McCarthy, said the declines were a healthy sign for the local bourse.
"We've had such strong runs in both the US market and the local market," Mr McCarthy said. "We need a bit of a flush, a bit of a correction, or at least a pause to consolidate to bring new buyers into the market.
"A concern from an investor's point of view is when a market runs and runs in one direction, because inevitably that then leads to a very significant correction."
Gold was the worst-performing sector on Friday, tumbling 3.48 per cent. Metals and minerals stocks (down 1.34 per cent) and the materials sector (down 1.17 per cent) were also deep in negative territory.
BHP Billiton fell 24? to $37.91, while Rio Tinto was off 70? at $68.55.
One bright spot was financial stocks, with the big four banks all posting gains. ANZ climbed 8? to $25.26, CBA advanced 1? to $63.25, NAB rose 6? to $25.31 and Westpac was 6? firmer at $26.25. Atlas Iron said it was on track to produce up to 7.7 million tonnes of iron ore in the 2013 financial year, after bringing its third Pilbara iron ore mine into production. The shares fell 6? to $1.81.
Macmahon Holdings said an existing agreement to sell its construction operations to Leighton meant it was unable to let an Indian-based bidder that emerged on Thursday conduct due diligence on the assets. Macmahon was up 0.5? at 29?, while Leighton was 35? higher at $19.
The spot price of gold in Sydney was $US1649.90 an ounce, down $US36.53.
Meanwhile, bond futures prices were lower following a selloff in US treasuries.
Commonwealth Bank interest rate strategist Phillip Brown said the futures market moved lower on Friday after the release of the minutes of the US Federal Reserve's Federal Open Markets Committee December policy meeting prompted a rise in US Treasury yields.
The minutes showed that some of the committee's voting members thought the central bank's bond purchasing program, known as quantitative easing, should be slowed or stopped by the end of 2013.
"It has been a pretty strong sell-off," Mr Brown said. "More to do with the selloff in the US after the Fed minutes than anything else."
He said the release of the key monthly US non-farm payrolls figures would be the major driver for bond markets going into the weekend.
"All the indications are the payrolls figure should be good," he said. "It is just a question of whether the US economy can continue to recover amid a debt ceiling fight and a backdrop of fiscal contraction."
Meanwhile, concern about a pending battle in the US Congress over the country's debt ceiling may take the shine off a positive payrolls number, Mr Brown said.
The US has reached its debt ceiling, meaning Congress will need to increase the limit the government can borrow within about six weeks to prevent the country defaulting on its bills.
But Republicans, who control the House of Representatives, have vowed to oppose moves to lift the ceiling unless Democrats agree to spending cuts, which will have a contractionary effect on the economy.
The March 10-year bond futures contract was trading at 96.575 (implying a yield of 3.425 per cent), down from 96.665 (3.335 per cent). The March contract was at 97.150 (2.850 per cent), down from 97.230 (2.770 per cent).