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Local shares had their biggest fall in three weeks as data showed the services sectors in Australia and China softened in December.

On Monday, the benchmark S&P/ASX 200 Index fell 25.2 points (0.5 per cent) to 5324.9 while the broader All Ordinaries Index lost 24.10 points (0.4 per cent) to 5327.7.

In the US on Friday, the Dow Jones Industrial Average finished higher while the S&P 500 closed lower. Markets around Asia were weaker on Monday afternoon.

The HSBC China services business activity index posted 50.9 in December, down from 52.5 in November. It was the weakest expansion in Chinese business activity in 28 months. The Purchasing Managers' Index (PMI) follows a similar survey by China's National Bureau of Statistics on Friday, which showed a slowdown in service-sector growth to a four-month low of 54.6 from the previous month's 56.0.

The weaker index added steam to a fall in Asian markets on Monday, on concern over whether China's slowdown will continue.

Locally, the Australian Industry Group Australian Performance of Services Index slipped 2.8 points to 46.1 in December, indicating the sector is contracting. The index had risen for three consecutive months since September, reaching a high of 48.9 in November.

Despite Monday's losses, Credit Suisse is predicting high single-digit gains for the ASX 200 this year.

''We are forecasting the local benchmark index to deliver total returns of 9 per cent in 2014 despite a flat outlook for company profits,'' Credit Suisse equity strategist Hasan Tevfik said. ''The macro-economic and company earnings outlooks for Australia are poor but local money will keep pouring into shares because with the returns on cash and bonds so low investors don't have much other choice.''

At the local close on Monday, the dollar was buying US89.48¢, down from US89.86¢ at Friday's close.

Energy was the worst-performing sector, down 0.9 per cent as oil commodity prices edged higher over the weekend after suffering their biggest weekly fall in 19 months. On Monday the Brent crude oil price was 0.1 per cent higher at $US107.04 a barrel, but most analysts are tipping oil prices to decline in 2014.

Australia's biggest oil producer, Woodside Petroleum, dropped 1.1 per cent to $37.70. Caltex Australia also lost 1.1 per cent to $19.48.

Karoon Gas dropped 5.1 per cent to $4.13.

Buru Energy bucked the trend, up 2.5 per cent at $1.82. Late last month the junior explorer provided a positive update on its Ungani project.

On Monday, the big iron ore miners were all lower despite the spot price, landed in China, holding up at $US135 a tonne.

BHP Billiton dipped 0.6 per cent to $37.56, Rio Tinto fell 0.9 per cent to $67.75 and Fortescue Metals Group dropped 1.9 per cent to $5.71.

The gold price rose for a third session to $US1239.33 an ounce.