Australia shares end 0.7 pct lower

8220;The Dow futures went from being well into positive territory late this morning to negative by mid-afternoon. The share market and the Aussie dollar both followed this lead,8221; said CMC Markets analyst David Taylor.

Alcoa,the biggest US aluminium producer and economic bellwether,kicked off the US reporting season on Monday and beat forecasts for its second-quarter profit.

That helped US stock futures rise 0.5 per cent in morning trade before they turned negative.

Iron ore miner Fortescue Metals slumped after saying Australia8217;s watered down tax on mining profits favours multi-nationals and diversified commodity producers at the expense of smaller companies.

The shares closed down 4.5 per cent at A4.26.

Global miner Rio Tinto,due to report production results on Wednesday,lost 3.2 per cent to A66.55 as metals prices fell.

Energy Resources of Australia,68 per cent owned by Rio Tinto,fell 4.6 per cent to A14.05 after it reported a 44 per cent drop in second quarter production and cut its full-year production guidance.

The Samp;P/ASX 200 index see-sawed either side of unchanged through the morning,but ended down 29.6 points to 4,380.3.

Volume was again below average as dealers trickled back from school holidays. The benchmark index rose 0.3 per cent on Monday in thin trading.

New Zealand8217;s benchmark NZX 50 index slipped 3.1 points to 3,008.9.