KEY POINTS:
PERTH - The Australian stock market closed weaker with falls in China sending the bourse into negative territory.
At the close, the benchmark S&P/ASX200 index was down 22.1 points to 6370.8, while the all ordinaries shed 19.7 points to 6399.9.
At 1624 AEST on the Sydney Futures Exchange, the June share price index contract was 17 points lower at 6391 on a volume of 17,743 contracts.
Macquarie Equities client adviser David Halliday said falls in China spooked investors, with the banks and retailers weighing heavily on the bourse.
"I think everyone has been scared by the big falls that we have seen so far in the trading session over in China, that's certainly knocking things around a little bit," he said.
"The banks were a bit weaker ... and the retail sector was terribly weak, Metcash got sold heavily on a very ordinary outlook statement for 2008, and that sort of dragged on the rest of the sector.
"We've seen the US market make record highs in the two or three of the last four sessions and there is no strong evidence of that market having any kind of pullback or any major jolts.
"While that keeps ticking along and while that external demand picture is strong, we should be stronger by the end of the week."
The market got off to a poor start despite a weak lead from Wall Street overnight.
The Dow Jones industrial average put on 8.21 points to 13,676.32, the Standard & Poor's 500 Index gained 2.84 points to 1,539.18 and the Nasdaq added 4.37 points to 2,618.29.
Locally the big miners were mixed, with BHP Billiton lifting eight cents to A$32.93 and rival Rio Tinto adding 25 cents to A$96.15.
The banking sector was weaker, with ANZ losing one cent to A$29.25, the Commonwealth Bank dipping 41 cents to A$54.91, the National Australia Bank dropping 34 cents to A$41.51 and Westpac shedding 14 cents to A$26.15.
The retailers were mixed, with David Jones gaining 10 cents to A$5.36, Coles dropping 16 cents to A$16.72, Woolworths slipping 50 cents to A$27.64 and Harvey Norman shedding five cents to A$5.28.
Metcash lost 37 cents to A$4.81 after the food and liquor wholesaler said it was facing an uncertain future trading environment with the ownership of Coles still undecided.
Wesfarmers dipped 18 cents to A$38.81 despite the company saying it was expecting a boost in profit from its property development division after it netted A$203 million from the sale of a portfolio of Bunnings warehouses.
The media sector was weaker, with News Corp dropping 12 cents to A$29.09, its non-voting shares dipping 13 cents to A$27.19, the James Packer-led PBL shedding 28 cents to A$20.58 and Fairfax losing two cents to A$4.87.
Destra gave up half a cent to 32.5 cents after the media company inked a deal with aspiring new media mogul Lachlan Murdoch to increase its stake in online film subscription outfit, Quickflix to almost one-fifth.
Quickflix put on one cent to 19.5 cents.
The energy sector was mixed despite an increase in the oil price, with Woodside finding 27 cents to A$44.22, Oil Search picking up three cents to A$4.10 and Santos dropping 33 cents to A$13.57.
The spot price of gold was slightly higher, and at 1633 AEST was trading at US$672.30 an ounce, up US$2.55 an ounce on yesterday's close.
The gold miners were mixed, with Newcrest adding 45 cents to A$23.34, Lihir Gold picking up seven cents to A$3.25 and Newmont dipping six cents to A$4.98.
Sultan Corp was the most traded stock on the market today, with 88.6 million shares changing hands worth A$4.44 million.
Sultan dipped 0.4 cents to 4.3 cents.
Preliminary market turnover reached 2.01 billion worth A$5.81 billion, with 610 stocks moving up, 738 down and 318 unchanged.
- AAP