A low volume rally in the major banks helped the Australian sharemarket shrug off "grim" Chinese data and reverse the opening fall.
Volume was more than 20 per cent below average but the S&P/ASX 200 index rallied from a 0.6 per cent opening drop to finish up 8.8 points, or 0.17 per cent, at 5346.9 as increasing signs of Chinese fragility kept many investors on the sidelines.
The HSBC flash manufacturing PMI index dropped deeper into the contraction zone at 48.1 points from 48.5 as output contracted at the fastest pace in 18 months.
Westpac economist Huw MacKay said the survey's new orders-to-inventories ratio declined to a level consistent with a headline index in the 47 point level, "implying that the survey is unlikely to rebound in a month's time".
However, the Shanghai composite index extended Friday's short-squeeze spike, rising 0.5 per cent at the close of the ASX, while the Chinese yuan pared its tentative rally from Friday's one year.
Leading industrial metal copper fell 0.5 per cent to $US650 a tonne on the data, steel rebar futures fell 0.8 per cent and gold dropped 0.7 per cent to $US1326 an ounce and spot iron ore was unchanged at $US110.70 a tonne on Friday.
The Australian dollar fell US0.3Â¢ to US90.50Â¢ on the news but bounced back to US90.80Â¢ despite further comments from US Federal Reserve officials largely supportive of the US dollar on Friday.
Mr Gibbs said speculation last week about another bout of Chinese stimulus was supporting the dollar but with US rates set to rise within the next year the dollar's upside was limited.
Comments by Dallas Fed President Richard Fisher that there could be a considerable period of time between the end of asset buying and the start of rate tightening soothed jitters from chairman Janet Yellen's comments on Wednesday that rates could rise within six-months.
More to come