The Australian share market closed lower after a weak Chinese manufacturing report dampened demand for commodities-linked companies, and softness among banking stocks.

The benchmark S&P/ASX200 index was down 16.8 points, or 0.36 per cent, at 4,591.2, while the broader All Ordinaries index fell 11.9 points, or 0.26 per cent, to 4,647.9.

On the ASX 24, the September share price index futures contract was 21 points lower at 4,580, with 32,932 contracts traded.

Despite the down day, the S&P/ASX200 index gained 83 points, or 1.84 per cent, over the week.

IG Markets strategist Ben Potter said market players took the opportunity to take profits in response to the recent three-day rally, ahead of a long weekend in the United States.

“We’re just seeing a bit of classic Friday afternoon profit-taking, it’s been a pretty good week for the market,” he told AAP.

“The Greek things went the right way (vote for austerity measures to avoid debt default) and it was almost a perfect week in terms of what you hope happened.”

Investors reacted adversely to data on Friday that showed Chinese manufacturing activity fell to its lowest level since February 2009.

HSBC Economics says the slowdown implies that policy tightening is working, and points to a peaking of Chinese inflation soon.

RBS Morgans private client adviser Craig Walker said the Chinese data prompted a sell-off in resources and energy companies.

BHP Billiton closed down three cents at $43.77, Rio Tinto fell 16 cents to $82.83, Oil Search was off seven cents at $6.58 and oil and gas producer Woodside was 10 cents weaker at $40.90.

The big retail banks were down after UBS has cut earnings forecasts for the big four banks.

ANZ was five cents lower at $21.95, Commonwealth Bank was off 38 cents at $51.92, National Australia Bank slipped 14 cents to $25.48 and Westpac backpedalled 23 cents to $22.03.

Making news on Friday, shares in rare earths supplier Lynas Corporation fell sharply as the company denied reports that a planned Malaysian plant could be delayed by one to two years.

Lynas was off 23 cents, or 11.62 per cent, at $1.75 and the worst-performing stock on the S&P/ASX100.

Preliminary national turnover was 1.96 billion shares worth $4.21 billion. There were 705 stocks up, 387 down and 305 unchanged.

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