The Australian sharemarket's opening rally petered out as mixed domestic and weak Chinese data offset hopes for European Central Bank stimulus.
In thin trading ahead of the US Labour Day holiday tonight, the market opened 0.5 per cent up before steadily declining to close up 3.9 points, or 0.07 per cent, at 5629.8 as falling iron ore futures weighed on sentiment.
China's official manufacturing PMI dropped 0.6 points to 51.1, confirming the world's second biggest economy continued to struggle to maintain growth momentum without further stimulus measures.
Westpac economist Huw McKay said the recovery was "tepid and patchy", with housing weakness a weighty anchor on both activity and confidence.
However, the Shanghai composite index climbed 0.8 per cent at the close of the ASX on ongoing hopes the government would blink with new measures to support growth.
In Tokyo the Nikkei index was up 0.3 per cent.
The Australian dollar slipped US0.2 cents to US93.40 cents and government 10-year bond yields rose 3 points to 3.323 percent after data showed June-quarter business inventories climbed 0.8 per cent.
That bolstered the outlook for a firmer GDP report this week and trimming hopes for interest rate relief this year.
However, ABS data showed national company operating profits tumbled 6.9 per cent, more than three times the forecasts and far worse than the downwardly revised 2 per cent achieved in the March quarter.
The dollar continues to be supported by global yield hunters mounting concerns the eurozone was sliding into deflation and the ECB would be late in reacting.
Eurozone consumer inflation fell to just 0.3 per cent in August, saved only by the 0.8 per cent rate in Germany.
"The prospect of more policy easing by the ECB appears to be a significant force underpinning asset prices and pressing down on global bond yields," Royal Bank of Scotland currency strategist Greg Gibbs said.
"However, tensions over Ukraine appear to be ratcheting up and there is a risk that this triggers some pull-back in global risk appetite," he said.
"Given the extreme in euro short positions, we see a significant risk of a squeeze higher in euro against emerging market and commodity currencies."
Spot iron ore bounced 0.8 per cent to $US87.90 a tonne on Friday, Dalian iron ore futures fell 0.7 per cent today. Copper rose 0.8 per cent to $US6995 a tonne and gold rose $US3 to $US1287 an ounce.
Lonsec senior client adviser Michael Heffernan said trading on the local bourse was light.
“I think it’s probably a lack of corporate impulse,” Mr Heffernan said.
“Some of the banks were a bit soft, and that’s probably what’s caused the market to be a bit lacklustre.”
Mr Heffernan said investors seemed to have shrugged off the Chinese manufacturing data.
He said the Chinese figures generally affect Australia’s resources sector but they appeared to have had limited impact on BHP Billiton and Rio Tinto.
The figures showed that growth in Chinese manufacturing activity slowed in August, reflecting a declining property sector and the waning impact of economic stimulus measures.
Mr Heffernan said the market might get more drive from major local and overseas economic data later in the week.
Australia’s quarterly GDP figures are released on Wednesday, and US jobs figures are out on Friday.
Also, the Reserve Bank of Australia meets on Tuesday, while the European Central Bank and the Bank of Japan are among others to meet later in the week. The property sector was one of the best performers on Monday.
The operator of Westfield shopping centres in Australia and New Zealand, Scentre Group, jumped six cents to $3.49, Goodman Group was up four cents at $5.62, and Dexus Property Group improved 1.5 cents to $1.22, according to preliminary closing figures.
In the resources sector, global miner BHP Billiton added three cents to $36.70, Rio Tinto climbed 17 cents to $62.80, and Fortescue Metals eased eight cents to $4.09.
Among the major banks, National Australia Bank dipped eight cents to $35.12, ANZ was steady at $33.43, Commonwealth Bank lost two cents to $81.30, and Westpac gained 10 cents to $35.14.
Telstra found two cents at $5.58, while Qantas dropped for the first time since posting its massive loss, shedding two cents to $1.45.
The broader All Ordinaries index was up 4.7 points, or 0.08 per cent, at 5,629.3 points.
The September share price index futures contract was down seven points at 5,608 points, with 16,910 contracts traded.
Preliminary national turnover was 1.54 billion securities worth $3.01 billion.