Slight drop on ASX

The Australian share market lost its earlier strong gains on book squaring to close in slightly positive territory, amid light trading ahead of the weekend.

The benchmark S&P/ASX200 index closed up 5.9 points, or 0.13 per cent, at 4435.5 points, while the broader All Ordinaries index gained 9.8 points, or 0.22 per cent, to 4442.7 points.

On the Sydney Futures Exchange, the September share price index contract was five points lower at 4427 on 15,838 contracts.

Although the market opened strongly it could not sustain an early surge in banking, industry and energy and mining stocks.

"I think the people are squaring away into the weekend," said Shaw Stockbroking head of research Tim Buckley.

He said energy stocks were mostly up but mining companies had a mixed day.

Buckley said a key index that indicated shipping activity had fallen, leading to a drop in the price of iron ore exporters.

Iron ore miner Fortescue Metals Group fell five cents to $4.11.

On Friday the head of mining giant Rio Tinto Ltd Sam Walsh said a proposed iron ore joint venture with BHP Billiton remained on track to be completed in mid-2010.

BHP Billiton shares fell eight cents to $36.62 and Rio Tinto was down 14 cents to $55.25.

Among the energy producers, Woodside Petroleum rose 60 cents to be $47.04 and rival Oil Search increased 15 cents to be $6.25.

Santos gained 17 cents to $15.52 and Origin Energy lost 30 cents to $14.72.

Shares in gas explorer Comet Ridge rose 3 cents, or 7.5 per cent, to 43 cents after it was awarded a permit to drill for coal seam gas in Queensland's Galilee Basin.

The spot price of gold continued its recent bull run and at 1638 AEDT was trading at US$989.30 per fine ounce, up US$10.65 from Thursday's local close of US$978.65.

The gold miners were mixed, with Lihir Gold steady at $2.98, Newmont up one cent to $5.48 and Newcrest down three cents to $31.82.

Banking stocks were mixed. Commonwealth Bank shares were up 70 cents to $45.68, Westpac rose 10 cents to $24.34 and ANZ was up two cents to $21.17.

National Australia Bank was off 44 cents to $27.21 and Macquarie Group ended down 53 cents at $48.70.

Mr Buckley said Commonwealth Bank and Westpac were making up for lost ground during the past few weeks.

"The market has taken the view that the ones that have been sold down the hardest are the ones that have got the most to rebound," he said.

Retailers had a mixed day also, with Woolworths rising 23 cents to $28.74 and David Jones rising 14 cents to $5.03, and Coles owner Wesfarmers down 39 cents to $24.75.

Harvey Norman shares were off three cents at $3.95.

- AAP