The Australian sharemarket hit a marginal 34-month high but the rally stalled at double-top technical resistance after weak Australian housing finance offset firm Chinese lending data.
The S&P/ASX 200 index traded in a narrow range and closed 11.8 points, or 0.24 per cent, down at 4959.5 points on low volume as both Chinese and Japanese markets were closed for public holidays.
Sentiment was also tempered by resurfacing eurozone jitters; with increasing evidence the crisis was engulfing France. Markets were nervously awaiting France's industrial production data out tonight to see if it confirmed the weakness reflected in contracting PMI manufacturing and services data.
Chinese lending more than doubled in January and M1 money supply grew at 15.3 per cent compared the expected 11.5 per cent, wit the increases at leats partly explained by the shift in the week-long New Year holiday from January last year to February this year.
Westpac economists said the lending indicated China's growth acceleration should continue into the September-quarter.
Deeper analysis by National Australia Bank of Friday's headline catching 25 per cent surge in Chinese trade data showed exports actually eased from 14.0 to 12.4 per cent in January, as did imports to 3.5 per cent from 6.0 per cent in December when adjusted for actual days worked. The distortion was from the change in the New Year holiday week to February.
The Australian dollar lost 0.3Â¢ to $US1.0295 after housing finance declined 1.5 per cent in December, with a marked 5.7 per cent slump in first time buyer finance and 1.3 per cent fall in investor finance.
Markets are only pricing in a 48 per cent chance of a rate cut in March, but the data pointed to a lowering in upside pressure on houses prices which would allow the Reserve Bank greater leeway in moving to counter the economic slowdown.
The euro continued to weaken against most currencies as former Prime Minister Silvio Berlusconi gained traction in polls and Spanish Prime Minister Mariano Rajoy faced calls for him to resign amid allegations of corruption.
On Friday US stocks rallied 0.5 per cent after the December trade deficit slipped to $US38.5 billion from the previous $US46 billion, but the move was not matched in credit markets which reflected a more cautious tone.
More to come