The S&P/ASX 200 index closed the day down 0.18% or 7.80 points to 4282.90, while the All Ordinaries followed suit, shedding 6.56 points to 4357.10.

The Australian dollar was fetching $US1.08 at 4.16pm (AEDT).

China’s inflation unexpectedly accelerated in January, thanks to a week long holiday, limiting the room for monetary easing as Europe’s debt crisis continues to dampen exports and the property market cools.

Based on data released from the country’s National Bureau of Statistics, consumer prices rose 4.5% year-on-year, adding pressure on officials to refrain from any immediate additional cut in banks’ reserve requirements.

Reports emerged that the government may wait to see data free from holiday distortions, while UBS AG predicts price gains may cool below 4% this month and Bank of America Corp estimates gains of about 3.3%, Bloomberg quoted.

Locally, the major miners were mainly down, with shares in BHP Billiton falling A59c to $37.16, while Rio Tinto dipped 16c to $71.60 after posting record underlying earnings of $US15.5 billion for calendar 2011, Fortescue Metals Group dropped A4c to $5.39, OZ Minerals gained 14c to $11.45 and Paladin Energy was down 3.5c to $1.825.

Maximus Resources was one of the big movers of the day with its shares up 43% to 10c after announcing it could proceed with a maiden drilling program on its Narndee project in Western Australia after raising $886,905 from a rights issue.

Likewise, shares in Prosperity Resources jumped 33% to 5.6c on no news.

The wooden spoon of the day went to Terrain Minerals with its shares falling 22% to 2.1c after announcing it had completed two deep diamond holes on its Aztec Dome target at Kambalda in WA.

Those in trading halts, pending the release of capital raisings, included Avalon Minerals, Straits Resources and Sheffield Resources, while Balamara Resources was issued with a “please explain” from the Australian Securities Exchange after its shares reached an intra-day high of 1.6c on February 3, from 1c.

It had no explanation for the increase.

Gold stocks were higher, with Australia’s largest locally owned miner Newcrest Mining up 6c to $33.44, while Kingsgate Consolidated gained 18c to $8.04.

At 4.35pm (AEDT) the spot price of gold was up marginally to $US1735.21 an ounce.

– with Bloomberg