The Australian share market closed flat, paring back early losses during the afternoon trade in quiet trading conditions. The benchmark S&P/ASX200 index was down 0.4 points, or 0.01 per cent, at 4,566.1 points, while the broader All Ordinaries index was up 1.4 points, or 0.03 per cent, to 4,586.3 points.

On the Sydney Futures Exchange, the September share price index contract was two points lower at 4,535 points, with 16,862 contracts traded. The market opened about 0.25 per cent weaker and was at similar levels at noon, with financial stocks leading the bourse lower.

The big banks recovered during the afternoon and the major miners rallied into the closing bell to finish higher. BHP Billiton ended on its high for the day at $41.13, up 29 cents, or 0.71 per cent. Rio Tinto ended at $73.20, up 19 cents, or 0.26 per cent, just a shade off its intra-day peak of $73.32.

Financial stocks ended weaker, were off their lows at the end of trade. ANZ was 16 cents lower at $23.05, Commonwealth Bank fell 36 cents to $52.59, National Australia Bank closed 16 cents to $25.03 and Westpac was off 23 cents at $23.62.

Reports from Russia that it would stop grain exports, due to its drought, sent the price of wheat futures on the Chicago Board of Trade soaring during the offshore session.

The front month September contract settled up 60 US cents to 7.8575 US dollars a bushel, the maximum allowable single day rise.

Graincorp ended up 20 cents, or 3.24 per cent, at $6.37, while AWB finished four cents, or 3.77 per cent, higher at $1.10. The two companies announced their intention to merge last week.

Agribusiness Elders advanced 3.5 cents, or 7.45 per cent, to 50.5 cents, while fertilizer company Incitec Pivot also benefitted, rising eight cents, or 2.37 per cent, to $3.46.

The spot price of gold in Sydney was $1,196.80 per fine ounce, up $1.80 from Thursday's close of $1,195.00. Newcrest Mining rose nine cents to $34.50 and Lihir Gold eased one cent to $4.26.

Making news on Friday, Mirvac Industrial Trust said it expected to default on a $123.5 million debt facility as it has been forced to re-start negotiations to extend the facility's maturity date. Mirvac Industrial was down 0.7 cents at 2.5 cents, while Mirvac Group backpedalled one cent to $1.355.

Programmed Maintenance Services said it expected offshore oil and gas opportunities to improve its second half, after earlier forecasting a slight lift in annual profit. Programmed ended steady at $2.01.

The most traded stock by volume was Telstra, with 53.67 million shares changing hands worth $176.57 million. Telstra closed up two cents at $3.31.

The company reports 2009/10 full-year earnings on Thursday, August 12. Preliminary market turnover was 1.71 billion shares worth $4.07 billion, with 530 stocks up, 480 down and 400 unchanged.

The Australian dollar was higher late in Asia as U.S. non-farm payrolls for July due later Friday remain the main focus. Economists expect 60,000 jobs were shed in the month compared with a drop of 125,000 in June.

In its quarterly outlook, the Reserve Bank of Australia signaled interest rates are likely to remain on hold for a few more months at least, saying policy settings are appropriate with the economy in recovery and inflation risk contained.

The local dollar largely ignored the release and bond pricing was unaffected. The Australian dollar was quoted at $0.9168, up from $0.9154 late Thursday. Against the Japanese yen, the Australian dollar was at 78.98 from 78.86.