THE Australian dollar closed weaker today as another lacklustre day on Wall Street weighed on risk sentiment.
The local unit also lost ground after a non-voting member of the US Fed's monetary policy committee questioned the need for more US interest rate cuts.
At 1700 AEDT, the Australian dollar was trading at $US0.7005/09, down one US cent, or 1.4 per cent, from yesterday's close of $US0.7106/11.
The currency has gained 10.7 per cent since its five-year low of $US0.6331 on October 11, but it is still 29 per cent off its 25-year high of 0.9849 reached in mid July.
For most of the day, the Australian dollar struggled against the US and Japanese currencies after Wall Street went backwards on renewed concerns about the global credit crisis.
Financial markets research group Forecast senior currency analyst Lee Wai Tuck said weaker US equity market performances hurt the Australian dollar as risk sentiment declined.
"The weaker close on Wall Street, that took some risk taking off the table, which saw the Aussie crosses fall against the yen," he said from Singapore today.
The Australian share market closed back in the red, in sharp contrast to yesterday's euphoria but contained its losses to less than one per cent.
The domestic market took its downwards lead from a weaker Wall Street still concerned by the global credit, and falls in domestic resources stocks.
The benchmark S&P/ASX200 index was down 35.2 points, or 0.81 per cent, at 4,300, while the broader All Ordinaries index fell 39 points, or 0.9 per cent, to 4,272.5.
On the Sydney Futures Exchange, the December share price index futures contract closed down 19 points to 4,385.
"After the gains we had over the last two days, we put in a pretty good performance today," ABN Ambro Morgans Brisbane director of equities Bill Chatterton said.
"Some of the financial are going better.
"People are being a little cautious about the resources sector of the market, but I think there is real value there."
Rio Tinto Ltd, the focus of a takeover proposal by BHP Billiton Ltd, said the long-term outlook for the company was positive despite the turmoil on financial markets.
Despite reporting quarterly production records for iron ore, bauxite and hard coking coal, Rio Tinto shares fell $4.30, or 5.19 per cent, to $78.50.
BHP Billiton closed $1.30, or 4.19 per cent,lower at $29.70.
Among the major banks, National Australia Bank sank 31 cents to $23.72, Commonwealth Bank dropped 80 cents to $43.75 and ANZ was five cents weaker at $18.20.
Westpac was four cents weaker to $22.70 while its takeover target St George Bank rose 42 cents to $29.85.
Iluka Resources Ltd gained 17 cents, or 4.61 per cent, to $3.86 after upgrading its profit outlook following a fall in the Australian dollar and rise in commodity prices.
Power supplier Origin Energy Ltd rose 25 cents to $15.75 after saying it expects a lift of up to 40 per cent in underlying earnings this financial year, boosted by its joint venture with ConocoPhillips.
Woodside Petroleum was $1.27, or 3.14 per cent lower at $39.15, Santos declined 60 cents, or 4.44 per cent, to $12.90 but Oil Search added 16 cents, or 4.19 per cent, to $3.98.
Spot gold in Sydney closed at $US845.45 an ounce, up $US0.05 on yesterday's close of $US845.40.
Among local gold stocks, Newcrest Mining dropped $1.64, or 6.15 per cent lower, to $25.01, Newmont Mining fell 16 cents to $4.61 and Lihir Gold lost three cents to $2.25.
AAP
