Local shares fell as a key measure of domestic consumer confidence weakened, with already shaky sentiment taking another hit when Holden confirmed it would cease local production in 2017.

The benchmark S&P/ASX 200 Index fell 39.4 points, or 0.8 per cent, to 5104.2, posting its fifth straight day of losses.The broader All ordinaries index shed 36.7 points, or 0.7 per cent, to 5109.5.

Local shares had a soft start after equity markets in the United States closed lower as speculation builds that the Federal Reserve might vote to start reducing quantitative easing at next week’s meeting. The beginning of “the taper'’ is widely expected to prompt a spike in the US dollar and a short term fall in global equities.

“Tapering will be a headwind for China and other emerging countries that benefited from large capital inflows over the last several years. Still, the market has likely priced in much of the effect of a taper, and the reaction during the actual event could be more muted,” US-based Principal Global Investors chief economist Bob Baur said.

In a positive development for global sharemarkets, politicians in Washington reached a budget agreement, that if passed through both the Senate and House, should prevent a repeat of October’s US government shutdown in January. On Tuesday Federal Treasurer Joe Hockey said Australia’s debt is expected to blow out to more than $500 billion.

BHP Billiton and the big four banks led the losses. Healthcare was the worst-performing sector on Wednesday, down 1.1 per cent as exchange rate sensitive exporters dipped. Vaccine maker CSL dropped 1.1 per cent to $66.34.

Losses on the local sharemarket accelerated in the afternoon, after Holden announced it would cease producing cars in Australia from 2017.

Holden chairman and managing director Mike Devereux confirmed that the decision to wind down its Victorian and South Australian manufacturing facilities within four years was taken on Monday afternoon, by the General Motors senior leadership team in Detroit.

Metals and mining stocks were mostly lower, despite the spot price of iron ore, landed in China, holding steady at $US139.40 a tonne.

After the local market closed on Tuesday, figures from China’s National Bureau of Statistics showed growth in industrial production slowed from an annual pace of 10.3 per cent to 10 per cent in the year to November. Consensus estimates were for a smaller decline to 10.1 per cent. The slightly weaker than expected result was a negative for Australia’s biggest coal and iron ore exporters that depend on Chinese demand.

Heavyweight BHP Billiton fell 1.7 per cent to $36.18, while Rio Tinto lost 0.6 per cent to $65.77.

One of the biggest coal miners on the bourse, Yancoal,  jumped 9.9 per cent to 72 cents as Federal Treasurer Joe Hockey relaxed the foreign ownership rules applied to Yancoal’s Chinese parent company Yanzhou. Whitehaven Coal lost 5.7 per cent to $1.82.

Copper miner Oz Minerals was the worst-performing stock, plummeting  14.2 per cent to $2.65, after it provided gloomy update on the prospects of its flagship mine in South Australia.

“This has been the third consecutive year of negative returns for the small resources sector, but the market is awkwardly poised to turnaround into positive share price returns in 2014,” EIM Capital PortfolioDirect investment strategist John Robertson said. “While growth in China is accelerating at stable rate, the US and UK have both reported three consecutive months of accelerating growth, which is a good sign for global demand. However emerging market growth is lagging.”

A weaker US dollar pushed capital into gold, boosting the precious metal’s spot price to $US1260.04 an ounce, its biggest jump since mid-October. Gold stocks were among the best-performers, led by Resolute Mining, up 22.35 per cent to 52 cents. Australia’s biggest goldminer, the embattled Newcrest Mining, rallied on the stronger gold price, up 8 per cent to $7.55.

Mr Robertson said he “remains bearish on gold equities because they are highly overpriced and riskier compared to direct investment in gold bullion”.

The Westpac-Melbourne Institute index of consumer confidence fell by 4.8 per cent from a near 3-year high of 110.3 points in November to a 5-month low of 105.0 points in December. The index is still up 5.0 per cent over the year.

Among the biggest food and liquor retailers, Woolworths  fell 1.1 per cent to $32.56, while Wesfarmers, owner of Coles, dipped 0.7 per cent to $41.15. An agreement between the supermarket giants to limit shopper docket petrol discounts to 4¢ per litre has met with mixed responses.

Commonwealth Bank and Westpac each lost 1 per cent to $74.50 and $30.88 respectively. ANZ fell 0.6 per cent to $30.59, and National Australia Bank shed 0.9 per cent to $32.87.

QBE Insurance Group rebounded 1.8 per cent to $11.01, as some analysts, including those at Deutsche Bank and Morningstar, started to upgrade their recommendations on the stock after it lost more than 30 per cent following a proft warning earlier in the week.

Qantas Airways also rallied 2.6 per cent to 99¢ after hitting a record closing low of 96.5¢ the day before.

West Texas Intermediate crude oil prices are hovering around a six-week high of $US98.50 per barrel. Origin Energy added 0.5 per cent to $13.34. Australia’s biggest oil producer, Woodside Petroleum, dipped 0.2 per cent to $37.51, as analysts digested Tuesday’s investor presentation. “While the outlook for 2014 production presented few surprises, it is clear that growth remains a challenge for Woodside,” Deutsche Bank analyst John Hirjee said.

Utilities was the only sector to close higher, up 0.8 per cent, propelled by some positive company news. DUET Group rose 2.3 per cent to $2.03 after announcing an interim distribution of 8.5¢ per stapled security. APA Group  was unchanged at $6.08 after lifting its financial year 2014 guidance 2 per cent to a range of $730 million to $740 million. The biggest utility AGL Energy added 1.4 per cent to $14.62.

However analysts said the outlook for the utilities sector remains soft. A report from think-tank the Grattan Institute released on Tuesday recommended a government review to avoid billions of dollars in write-downs in the utility sector as power generators are expected to be hit by falling electricity demand.

Nine Entertainment Co continued to lose ground after its disappointing initial public offer on Friday, shedding 1.3 per cent to $1.90- below the IPO price of $2.05.

Brambles shed 0.7 per cent to $8.80. Most analysts upgraded their recommendations after the spin-off of its document management business Recall Holdings on Tuesday. Recall’s shares fell 2.4 per cent to $4.39.

Bio-tech DorsaVi, which makes physiotherapy gadgets, closed unchanged from its IPO share price of 40 cents.

Three companies will list on the exchange on Thursday with IPOs from Sino Australia Oil & Gas, Real Energy Corp, and PM Capital Global Opportunity Fund.