SYDNEY: Australian stocks ended flat on Friday but posted their biggest quarterly decline since the months following the collapse of Lehman Brothers three years ago, as fears over a global economic slowdown came to the fore.
Miners were among the worst performers on Friday as investors grew concerned over a slowdown in China after data showed the manufacturing sector contracted for a third consecutive month in September.
Rio Tinto dropped 1 percent, BHP Billiton eased 0.1 percent while Fortescue Metals Group dropped 0.7 percent despite reporting solid third quarter shipment data.
The benchmark S&P/ASX 200 index inched up 0.34 point to 4,008.60, according to latest available data, after drawing support from the psychological 4,000 point level.
Fears of a spiralling European debt crisis and a slowing global economy caused investors to slash their bets on risky assets in the September quarter and Australia, which was among the few developed economies to escape a recession during the global crisis, was not immune.
"There is a huge amount of indecision. No one knows which way the global events are going to pan out. Personally I see a downside risk," Chris Weston, an institutional dealer at IG Markets said.
Australian shares are forecast to lose 5.2 percent over 2011, hit by the global economic turmoil, though investors saw a 20 percent gain from here to mid-2012 if there was a reduction in uncertainty, a Reuters poll showed.
The market has fallen over 15 percent so far in 2011, putting it on course for the second sharpest annual fall in 2 decades and the heightened volatility has led strategists to take a cautious view -- despite historic low valuations.
While window-dressing buying by fund managers to improve their books helped shares snap a three week losing streak, further gains may be hard to get as macro concerns remain.
Takeover activity and fund raising helped some miners stay in the black with Anvil Mining climbing 31.9 percent, after Minmetals made a C$8.00 per share cash offer for the company.
Paladin Energy rose 3.9 percent, bouncing off its lows after announcing a funding boost of A$68.2 million from an institutional placement of shares on Thursday.
Sandfire Resources rose 2.9 percent after announcing it secured a A$390 million debt facility with Australia and New Zealand Banking Group.
Food group Goodman Fielder fell 12.5 percent after announcing a discounted share raising as part of a turnaround strategy.
New Zealand's benchmark NZX 50 index rose 1.3 percent to 3,343.35.
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