The share market improved from a poor start but still closed marginally lower, due to weakness in sectors exposed to commodities.
Lonsec senior client adviser Michael Heffernan said some investors took profits after the market's recent strong run upwards, and lower iron ore and oil prices weighed upon the resources sector.
But the market showed positive signs in afternoon trading.
"I think there's been a real seachange in sentiment over the last two weeks since the nadir of the market a couple of weeks ago," Mr Heffernan said.
"The strong recovery is largely due to a change of sentiment in Europe, and the American reporting season has been better than expectations.
"So, two of the nagging dead weights around our necks have been alleviated."
The next factors likely to be drivers of market direction included financial reports from three of the big four banks, coming later this week.
Investors are also waiting on Wednesday's meeting of the US Federal Open Market Committee for signs of a possible timeline for interest rate hikes.
Among the local banks, Westpac climbed 33 cents to $34.89, Commonwealth Bank gained 17 cents to $80.19, National Australia Bank added seven cents to $34.60 and ANZ was 6.5 cents higher at $33.41.
In resources, BHP Billiton lost 49 cents to $33.32, Rio Tinto shed 76 cents to $59.03 and Fortescue Metals was flat at $3.35.
Woodside Petroleum shed 61 cents to $39.54 and oil producer Santos retreated 11 cents to $12.82.
Qantas shares continued to soar, adding 11 cents to $1.61, their third straight session of strong gains since CEO Alan Joyce said it achieved an underlying profit in the first quarter of the financial year.
* At the close Tuesday, the benchmark S&P/ASX200 index was down 6.4 points, or 0.12 per cent, at 5,452.6 points.
* The broader All Ordinaries index was down 7.9 points, or 0.15 per cent, at 5,434 points.
* The December share price index futures contract was up 10 points at 5,448 points, with 22,615 contracts traded.
* The price of gold in Sydney at 1700 AEDT was $US1,228.60 per fine ounce, down $US2.60 on Monday's price of $US1231.20.
* National turnover was 1.95 billion securities worth $4.4 billion.