The Australian share market closed slightly lower on Tuesday but bounced back from earlier lows caused by concerns about European sovereign debt. At the close, the benchmark S&P/ASX200 index had fallen 14.2 points, or 0.31 per cent, to 4,628.8 points, while the broader All Ordinaries index had dropped 14.6 points, or 0.31 per cent, to 4,708.3 points. On the ASX 24, the June share price index futures contract was down 17 points at 4,630, with 42,528 contracts traded. Trading on overseas markets on Monday had been gripped by fears over the solvency of Greece and concerns that Spain, or even Italy, may be dragged into the turmoil that has already seen three euro countries bailed out.

Nervousness about how Europe's sovereign debt worries might affect the interest rate margins of local banks pulled back the big four Australian banks. Commonwealth Bank sagged 50 cents to $50.92, National Australia Bank slumped 17 cents to $26.49, Westpac retreated 23 cents to $21.84, and ANZ dumped 22 cents at $21.80. In the resources sector, global miner BHP Billiton shed five cents to $43.24 and Rio Tinto was up two cents at $79.01. Industrial conglomerate Wesfarmers was down 39 cents at $32.71 after it downgraded sales forecasts for its Curragh mine in Queensland due to recent rainfall and a mechanical failure. Agribusiness Ruralco Holdings picked up nine cents at $3.33 after it increased first half profit by 31.5 per cent and said growth in new businesses provided a cautiously optimistic outlook for the next six months.

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Household goods rental firm Thorn Group was 10 cents richer at $2.08 as the company forecast a strong year ahead, after lifting annual net profit by 13 per cent. Global testing services group Campbell Brothers declined 66 cents to $44.94 despite reporting a 75.7 per cent rise in full year net profit. Preliminary national turnover was 2.17 billion shares worth $5.45 billion, with 696 stocks down, 387 up, and 425 unchanged. On Wall Street on Monday, the Dow Jones Industrial Average fell 130.78 points, or 1.1 per cent, to 12,381.26 points.

The Australian dollar erased much of a sell-off in U.S. and European trading helped by technical buying and rising inflationary concerns in the region Tuesday. In addition, after weakening early in Asia as a Goldman Sachs' note downgrading China circulated on trading desks, the Australian currency bounced back as the full report wasn't as bad as first feared. The currency reached its low point of $1.0482 in early trade before rallying for much of the remaining session. Helping the currency bounce was a round of technical buying around $1.0490 $1.0500, as well as the results of the Reserve Bank of New Zealand's second-quarter survey, which showed business managers in New Zealand expect inflation pressures to increase over this year and the next. The Australian dollar was changing hands at $1.0540, down slightly from $1.0552 late Monday. Against the Japanese yen, the Australian dollar was at 86.18, down from 86.515.

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