The benchmark S&P/ASX200 fell 2.80 points to finish at 5383.1, while the broader All Ordinaries lost 3.40 points to finish at 5369.90. Despite the dip, the market has risen 5.1 per cent since its low on October 13.

Wall Street dived 0.9 per cent overnight, weighing on the local market at the start of trade.

"It's a poor lead from overseas," said Suncorp's head of Treasury research Darryl Conroy. "That was evident in stock markets but commodity markets were very soft and also currency markets. There was a resumption of the rise in the US dollar and a fall in everything else."

Resurgent bank stocks and a strong purchasing managers index result from China briefly pushed the market back into positive territory but selling in Rio Tinto and BHP stocks pushed the market back down.

HSBC China Manufacturing PMI improved to 50.4 in the flash reading for October, up from 50.2 in the final reading for September.

"While the manufacturing sector likely stabilised in October, the economy continues to show signs of insufficient effective demand," said HSBC.

"This warrants further policy easing and we expect more easing measures on both the monetary as well as fiscal fronts in the months ahead."

The Chinese data pushed the market back into positive territory briefly around midday.

"We've had some PMI data out of China that was stronger than the previous reading and obviously it's pretty closely watched," said Mr Conroy.

"Even though the economy is broader than that, analysts focus on what we know. That was nice little confidence boost."

The banks performed better than the market, with the Big Four finishing in positive territory.

"Financials were middle of the road, with telecoms and healthcare topping the charts," he said. "But with financials being 46 per cent of the index, whatever they do, obviously the ASX200 is going to do."

Mining stocks lead the market down, with BHP falling 1.84 per cent to $33.64 and Rio Tinto down 2.19 per cent to $59.87.

"The losses today have been in the materials sector, BHP and Rio," said Bill Chatterton, senior private client adviser with RBS Morgan. "They've had some quite good days over the last little while so there's a little bit of profit-taking today. They've been up over the last few days and I think there's a few traders today taking a little bit of money off the table."

Mr Chatterton said the market had a lack-lustre day. "There was not a lot of action really," he said. "Our Yankee friends had a really ordinary night although we didn't take the negativity on board. Sector-wise, banks have been quite reasonable, they're up a little bit but not very much."

Westpac lead the banks higher, closing up 0.83 per cent to 34.02. Commonwealth Bank closed up 0.77 per cent to $78.17, National Australia Bank closed up 0.56 per cent to $34.04 and ANZ closed up 0.15 per cent to $32.93.

Telstra was another strong performer, closing 0.73 per cent higher to $5.50. AMP closed 0.19 per cent higher to $5.39, Wesfarmers was up 0.91 per cent to $42.23 and Asciano finished 1.67 per cent higher at $6.09.