KEY POINTS:
PERTH - The benchmark S&P/ASX200 index was down 19.9 points, or 0.57 per cent, at 3,488.7, while the broader All Ordinaries index shed 17.2 points, or 0.5 per cent, to 3,428.6.
On the Sydney Futures Exchange at 1622 AEDT, the March share price index contract was 16 points lower at 3,450 on a volume of 21,846 contracts.
IG Markets head of dealing Oliver Stevens said the local market had not been helped by a speech in the US Treasury Secretary Timothy Geithner outlining President Barack Obama's plan to overhaul the government's US$700 billion financial bailout package.
"It looked like we were going to open up higher and we just drifted off," Mr Stevens said.
"We've seen Asian markets and US futures drift off overnight as well.
"It's disappointing."
Locally, Mr Stevens said company reports had been very weak of late, undermining investor confidence.
"There is concern that we've seen so many capital raisings, which has really shocked the market.
"Everyone seems to have come out asking for money and no one is prepared to believe in a rally until we see an end of that."
He said mining giants BHP Billiton and Rio Tinto had been fairly resilient.
Rio Tinto fell 44 cents, or 0.89 per cent, to $48.96, while rival BHP Billiton inched one cent higher to $33.35.
The major banks were weaker. Commonwealth Bank of Australia retreated 34 cents to $29.60, Westpac dropped 34 cents to $16.18, National Australia Bank dipped 15 cents to $18.75 and ANZ inched one cent lower to $12.45.
The spot price of gold in Sydney was US$896.15 an ounce at 1627 AEDT, down US$11.55 on Monday's local close of US$907.70 an ounce.
Among the gold miners, Newcrest lost 20 cents to $32.00, Newmont slid five cents lower to $6.10, Lihir inched two cents higher to $3.19 and Sino Gold eased seven cents to $4.97.
The energy sector was a rare bright spot.
Woodside put on 35 cents to $32.36, Santos appreciated 41 cents to $14.55 and Oil Search inched one cent higher to $4.56.
Making headlines on Tuesday, discount electronics retailer JB Hi-Fi defied the economic downturn to post a 40 per cent lift in first half profit and says it is looking forward to continuing strong sales as it opens more stores.
Shares in JB Hi-Fi soared $1.60, or 17.39 per cent, to $10.80.
Beef producer Australian Agricultural Company expects to return to profit in 2009 after booking a $38.7 million loss in 2008.
Its shares retreated 10 cents, or 6.02 per cent, to $1.56.
AWB shares slumped 51 cents, or 25 per cent, to $1.53 after the wheat marketer announcing its first half profit was likely to fall by between 45 per cent and 55 per cent amid slow trading.
Fairfax was the worst performing media stock, down 5.5 cents to $1.13. News Corp gave up 30 cents to $10.95 and its non-voting stock slipped 30 cents to $10.00.
The most traded stock by volume was iron ore miner Admiralty Resources, with 76.4 million shares worth $2.31 million changing hands.
Admiralty shares gained 0.7 cents, or 26.92 per cent, to 3.3 cents.
Preliminary market turnover was 1.01 billion shares worth $3.19 billion, with 347 stocks up, 461 down and 292 unchanged.
- AAP
