The S&P/ASX 200 index opened lower as expected as jitters about the Fed’s tapering of its bond-buying programs made punters more risk-averse.
The negative sentiment was felt most in the technology and telecommunication space, falling 2.1% and 0.8% respectively.
Basic materials overlooked data that indicated China’s manufacturing sector was expanding, closing down 0.8%.
According to HSBC Holdings and Markit Economics, China’s preliminary purchasing managers' index reading for August was 50.1, up from 47.7 in July.
“Domestic demand is strong enough to support 7.5% growth in 2013,” BNP Paribas senior economist Ken Peng told Bloomberg from Beijing.
The data was dismissed by the key Asian stocks, which were both trading more than 0.4% lower.
Locally, the index finished down 0.5% or 24.3 points to 5075.7 points, as losses were posted in all sectors but utilities.
The heavyweight miners were both weaker. BHP Billiton fell 1% to $A35.37 and Rio Tinto lost 0.9% to $59.04.
Iron ore producer Fortescue Metals Group had a better session, firming 4.2% to $4.26 after it boosted full-year profits by 12%.
Fellow Pilbara producer Atlas Iron closed 10.2% lower at 83.5c as shareholders reacted to a $245.1 million loss reported for the 2013 financial year.
Perseus Mining consolidated after its recent strong performance, falling 6.1% to 76.5c.
Among the other gold miners, St Barbara declined 7.9% to 70c, OceanaGold Corporation dipped 3.3% to $2.06 and Medusa Mining sank 8.1% to $2.50.
Copper-gold producer Inova Resources soared 23.5% to 21c after receiving a takeover offer from Chinese company Shangxi Donghui Coal Coking & Chemicals Group.
Today Inova said its major shareholder intended to accept the offer.
Meanwhile, explorer Crusader Resources travelled up 7.5% to 21.5c on the back of releasing high-grade hits from its Posse iron ore mine.