The Australian share market firmed 0.3 per cent by the market close after treading water during a trading session dominated by lacklustre offshore leads and exceptionally light volumes.

The benchmark S&P/ASX200 index had gained 16.2 points, or 0.34 per cent, to 4,784 points, while the broader All Ordinaries index had firmed 15.4 points, or 0.32 per cent, to 4,868.8 points.

On the ASX 24, the December share price index futures contract was down eight points at 4,762 points, with 10,884 contracts traded.

The contract expired on Thursday.

The March 2011 share price index futures contract was up 13 points at 4,783 points, on volume of 28,576 contracts.

Macquarie Private Wealth adviser Helen Spencer said resources and industrial stocks put in mixed performances in the absence of significant investment themes as the market consolidated ahead of the Christmas break.

Australia's biggest lender Commonwealth Bank added 44 cents, or 0.87 per cent to $50.94, while second biggest Westpac gained eight cents to $23.15.

But ANZ Banking Group lost six cents to $23.76 and National Australia Bank eased one cent to $24.44.

Preliminary national volume reached 2.75 billion shares, worth $5.97 billion, with 591 shares trading up, 512 down, and 386 unchanged.

Resources heavyweights BHP Billiton and Rio Tinto put in mixed performances.

BHP Billiton, the world's biggest miner, added three cents to $45.38 and Rio Tinto eased two cents to $87.00.

Oil majors were also mixed, with Santos Ltd surging 37 cents, or 2.94 per cent to $12.97 after announcing it is in advanced discussions with the Korea Gas Corporation to purchase 3.5 million tonnes per annum of liquefied natural gas from the Gladstone LNG project and take a 15 per cent stake.

Woodside Petroleum gained 12 cents to $43.40, while Oil Search fell two cents to $7.00.

Alumina Ltd jumped 12 cents, or 5.04 per cent, to $2.50 on turnover of 59.5 million shares, Sims Metal Management added 58 cents, or 2.76 per cent, to $21.58, and Bluescope Steel advanced five cents, or 2.21 per cent, to $2.31.

Major retailers were mixed, with grocery giant Woolworths up 40 cents, or 1.5 per cent to $27.15, department store owner David Jones adding six cents, or 1.38 per cent to $4.42, but rival Myer Holdings losing three cents to $3.43.

Auckland based The Warehouse Group plunged 24 cents, or 8.42 per cent, to $2.61.

Airlines were pushed into the spotlight after the Australian Competition and Consumer Commission conditionally approved a tie up between Virgin Blue and Air New Zealand on their trans Tasman routes.

Virgin Blue soared 2.5 cents, or 5.88 per cent to 45 cents a three week high while Air New Zealand lifted 6.5 cents, or 6.16 per cent, to an eight-month high of $1.12 on the local bourse.

National carrier Qantas fell seven cents, or 2.57 per cent, to $2.65.

Leighton Holdings gained eight cents to $33.30 after its subsidiary Thiess won a $1.015 billion contract extension to operate the Mt Owen coal mine in the upper Hunter Valley, NSW, until the end of 2015.

Orica Ltd firmed four cents to $25.20 after reiterating its fiscal 2011 guidance of a rise in underlying profit that would see the world's biggest explosives maker achieve 10 consecutive years of record profits.

Alumina Ltd was the top traded stock by turnover, with 59.5 million shares traded for a value of $145.5 million.

The Australian dollar sank Thursday, with euro zone sovereign debt concerns pushing buyers out of the higher yielding but riskier currency.

Overall sentiment for Asia and riskier assets declined after Moody's Investors Service said it might downgrade its ratings on Spanish government debt due to the country's high demand for refinancing and its problems meeting borrowing needs next year.

With euro zone leaders due to meet in the next day to sort out the Spanish concerns and broader debt issues in Europe, the Australian dollar came under pressure in a light volume holiday environment.

The Australian dollar traded at $0.9855, down from $0.9950 late Wednesday but up from near $0.9550 at the start of December.

Against the Japanese yen, the currency traded at 83.045, down from 83.45.

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