The Australian sharemarket followed other Asian markets into the red as regional earnings disappointed investors and reports that Greece was struggling to nail down a debt restructuring agreement.

Following a directionless session the S&P/ASX 200 index closed 16.6 points, or 0.39 per cent, down at 4251.2 points after learning the expansion in the Chinese services sector slowed more than expected, raising the spectre of hard landing in the world's second biggest economy.

Overnight European markets and Wall Street closed little changed, with markets unimpressed by Chinese premier Wen Jiabao's comments that China would "consider" greater involvement in the European bailout funds.

US Federal Reserve chairman Ben Bernanke told Congress that the US economy was showing signs of improvement but it remained vulnerable to shocks.

The Shanghai composite index was off 0.1 per cent at the close of the ASX after weak industrial profit reports and the non-manufacturing purchasing managers' index fell to 52.9 from 56 in December. Japan's Nikkei index was down 0.4 per cent

The Australian dollar retreated from its high of $US1.0760 to $US1.0675 as the US dollar rallied against most major currencies ahead of the non-farm payroll data out tonight.