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MELBOURNE - The Australian share market finished weaker after directionless trading as major traders stood aside on uncertainty over the US government's proposed US$700 billion ($840 billion) financial markets rescue package.
At 1615 AEST, the benchmark S&P/ASX200 was 54.5 points lower, or 1.09 per cent, to 4927.4, while
the broader All Ordinaries lost 47.4 points, or 0.95 per cent, to 4960.8.
The December share price index futures contract was down 79 points at 4972, on a volume of 20,162 contracts.
"The volumes were light except for some big crossings in BHP Billiton earlier," Anthony Anderson, senior broker with Man Financial said.
"Essentially the big guys are standing aside until there's a bit of certainty out of the US.
"Also a lot of the hedge funds are standing to the side because of the no shorting - a lot of the hedge funds are long short and want to have reduced risk that way, so there are a lot of people that are keen observers today.
"Babcock's fired up today," he added.
Investors rushing to cover short positions sent Babcock & Brown shares on a roller coaster ride amid rumours a European group might have put in a bid for the beleaguered investment firm.
The firm's shares closed 67 cents, or 39.4 per cent, higher at $2.37 after touching an intra-day high of $2.74 before the company denied any knowledge of a bid.
"Overall it's really directionless trading," Mr Anderson said.
"The banks have had a good run recently on broker upgrades on the sector.
"Traders are keen to buy the banks but not while uncertainty surrounds them."
At 1615 AEST, the Commonwealth Bank had lost 15 cents to $44.05, National Australia Bank had fallen 61 cents, or 2.38 per cent, to $24.99, while ANZ was down 12 cents at $18.52.
Westpac was 62 cents, or 2.53 per cent weaker, at $23.86, and its takeover target St George Bank was 79 cents lower, or 2.46 per cent, at $31.30.
In the US overnight, the Dow Jones Industrial Average closed down 29 points, or 0.27 per cent, at 10,825.17.
The tech-heavy Nasdaq composite gained 2.35 points, or 0.11 per cent, to 2,155.68 and the broad-market Standard & Poor's 500 index lost 2.35 points, or 0.2 per cent, to a close of 1,185.87.
"Traders are a little bit nervous about the big resources companies - either way there is going to be some worldwide slowdown so the likes of BHP and Rio are sidelined I would say," Mr Anderson said.
Australia's major miners finished weaker today.
By 1615 AEST BHP Billiton was $1.47, or 3.88 per cent, lower at $36.40, while takeover target Rio Tinto dropped $3.64, or 3.45 per cent, to $101.86.
Energy producers were mixed with Woodside Petroleum backtracking three cents to $57.32, Santos firming 52 cents, or 2.64 per cent, to $20.20, and Oil Search slipping 12 cents, or 2.02 per cent, to $5.82.
In the gold sector, Newcrest Mining added 76 cents, or 2.85 per cent, to $27.46, and Lihir Gold put on five cents or 1.82 per cent to $2.80.
At 1630 AEST, spot gold was trading in Sydney at US$887.70 an ounce, down US$1.20 on yesterday's close of US$888.90.
Gold stocks as well as Telstra are one of the few safe havens in the current market, Mr Anderson said.
"Telstra has been well supported of late.
"People see it as ahead of its local competitors and it's one of the few safe havens - really liquid along with gold."
Telstra was 11 cents, or 2.55 per cent, lower at $4.20.
In company news, Qantas says it is not planning, and has no need, to undertake a capital raising, after yesterday deferring a proposed listing of its frequent flyer business.
At 1615 AEST, Qantas shares were two cents higher at $3.25.
Mirrabooka Investments is maintaining an extremely strong cash position while it advises patient investors that the next two years will present a "twice a century" buying opportunity.
Mirrabooka shares gained one cent, to $1.65.
Up market retailer David Jones was the only stock within the sector to buck a downward trend, finishing 19 cents firmer, or 4.33 per cent, at $4.58.
Wesfarmers closed 88 cents lower at $29.47, and The Reject Shop fell 24 cents to $10.30.
Investors also shunned the media sector, with Fairfax Media easing six cents to $2.81, Consolidated Media losing 11 cents to $2.59 and News Corp falling 30 cents to $15.70 while its non-voting scrip dropped 48 cents to $15.37.
At 1615 AEST, the most traded stock by volume was Admiralty Resources, with 47.2 million shares changing hands worth $4.06 million.
Admiralty shares were 1.9 cents down at 7.8 cents.
Preliminary national turnover was 1.25 billion shares, valued at $5.08 billion, with 475 stocks up, 518 down and 281 unchanged.
- AAP