Dollar falls as shares close at week-low

THE Australian dollar closed lower after a poor session on global and domestic stock markets.

At 5pm AEDT, the Australian dollar was at 91.44 US cents, down from Friday's close of 91.60 cents.

Since 7am AEDT, the local unit traded between 91.77 US cents and 91.31 cents.

CMC Markets senior dealer Tim Waterer said the local unit slid during the trading day after coming under pressure from declining stock prices.

"It's been weaker for most of the day," he said.

"Weakness in Asian stock markets prompted some selling in the Aussie as a defensive move.

"I guess some profit-taking is expected after the good week we had last week."

On the local equities market, the benchmark S&P/ASX200 index was down 0.71 per cent to 4784.1 points, moving below 4800 for the first time in a week.

The broader All Ordinaries index fell 0.66 per cent to 4799.4 points, while on the Sydney Futures Exchange was 28 cents lower at 4791 points on volume of 68,499 contracts.

Hong Kong's Hang Seng index fell 0.86 per cent to 21072.23 points late in Monday's session, while the Chinese Shanghai composite index slid 1.37 per cent to 2972.23.

Stock markets are viewed by currency traders as a barometer of risk appetite and so their movement affects risk-sensitive currencies such as the Australian dollar.

At 5pm AEDT, the Australian dollar was trading at 66.56 euro cents, down from Friday's close of 66.88 euro cents, and at 82.82 Japanese yen, down from 83.01 yen.

The euro finished at 1.3738 US dollars, up from Friday's close of 1.3695 US dollars, and 124.42 Japanese yen, up/down from 124.09 yen.

The US dollar was at 90.58 Japanese yen, down from 90.38 yen.

The Australian bond market closed mixed.

At 4.30pm AEDT, the yield on the Commonwealth Government May 2013 bond was at 5.125 per cent, where it closed on Friday, while the yield on the April 2020 bond was at 5.669 per cent, down from Friday's close of 5.674.

On the Sydney Futures Exchange, the March three-year bond futures contract was at 94.890, down from Friday's close of 94.895, while the March 10-year bond futures contract was at 94.345, steady from Friday.

JP Morgan economist Sally Auld said market activity was strong because the March three and 10-year bond contracts were rolling over to the June contracts.

She said Australian government bonds rallied during the local session after the local stock market fell late in the trading day.

"Later in the day the Aussie (dollar) came down and the S&P futures came off and we saw bonds better bid," she said.

"They've been reasonably well supported and that's where we'll close."

Ms Auld said investors would focus on the the minutes of the RBA's March meeting, to be released on Tuesday, as a guide to the central bank's decision-making intentions.

She said bonds could do well if the RBA minutes don't hint at an April rate rise.

"I don't think they'll be super hawkish," she said.

"It might see the market a little bit better bid."

High interest rates corrode the value of safe-haven assets like bonds.

At 4.30pm AEDT, the 90-day bank bill rate was at 4.380 per cent, down from Friday's close of 4.460, while the 180-day bank bill rate was at 4.640 per cent, down from 4.720 on Friday.

At 4pm AEDT, the RBA's trade weighted index (TWI) was at 71.1 points, down from Friday's close of 71.3.

Meanwhile, the Australian share market posted its weakest close in just over a week as other bourses in the region slid after mixed reports about the US economy inspired caution among investors.

The benchmark S&P/ASX200 index was down 34 points, or 0.71 per cent, to 4,784.1 points. The index moved below 4,800 for the first time in a week.

It was the lowest close for the S&P/ASX200 since March 5 when it closed at 4763.1.

The broader All Ordinaries index fell 32.1 points, or 0.66 per cent, to 4,799.4.

On the Sydney Futures Exchange, the March share price index contract was 28 cents lower at 4,791 points on volume of 68,499 contracts.

The contract is set to expire on Thursday, March 18 at 1200 AEDT.

MS Global head of equity sales Nick Burmester said the market was directionless because of weak leads from offshore.

Investors found few reasons to buy after US economic data released on Friday painted an uneven picture of recovery in the world's largest economy. While retail sales were better than expected last month, a weaker report on consumer sentiment disappointed traders.

"People are waiting for the big news on bulk commodity prices, which is due by the end of the month," Mr Burmester said.

"Reporting season is over and I think people are looking for some more firm offshore leads after a good 10 days or so up days in the US.

"So I think it's a bit directionless, the volumes have been pretty weak."

In the US on Friday, the Dow Jones industrial average closed up 0.1 per cent, the S&P500 index ended 0.25 points lower and the NASDAQ finished down 0.8 points.

Material and financial stocks locally were down almost equally and in line with the overall market, Mr Burmester said.

Among the major banks, National Australia Bank was seven cents lower at $26.83, Commonwealth Bank fell 28 cents to $55.60, ANZ was 24 cents lower at $24.02 and Westpac was down 27 cents to $26.63.

BHP Billiton was down 28 cents to $42.57 and Rio Tinto was 58 cents lower at $75.38.

In news on Monday, China blamed market forces and a campaign by BHP Billiton for the failure of its planned $US19.5 billion ($A21.24 billion) investment in Rio Tinto last year, according to a report.

Oil Search said the massive Papua New Guinea liquefied natural gas project (PNG LNG) had reached financial close and was proceeding in full.

Oil Search was up two cents to $5.68.

Santos, which has a stake in the $14 billion project, was up 12 cents, or 0.85 per cent, to $14.18.

Woodside was down 42 cents to $44.99.

Gold miner Avoca Resources has unsuccessfully attempted to acquire the remainder of the Frog's Leg mine in Western Australia from its Canadian joint venture partner.

Avoca shares dropped eight cents to $1.89.

Telstra fell two cents to $3.04 and Optus owner Singapore Telecommunications dropped three cents to $2.44.

The spot price of gold in Sydney was $US1,104.80 per fine ounce, down $US7.40 from Friday's closing price of $US1,112.20 per ounce.

Among major gold stocks, Lihir Gold was four cents weaker at $2.97 and Newcrest Mining was 52 cents, or 1.52 per cent, weaker at $33.69.

The most traded stock by volume at 1639 AEDT was pharmaceutical and biotechnology group OBJ Ltd, with 152.44 million shares worth $9.64 million changing hands.

OBJ stock was down 0.2 cents, or 3.28 per cent, at 5.9 cents.

Overall market turnover was 2.47 billion shares worth $4.58 billion, with 441 stocks up, 627 down and 354 unchanged.