The Australian share market has finished slightly higher as strength in banking stocks helped pare back earlier losses.
IG market analyst Angus Nicholson said the local market lost more than one per cent in morning trade after weakness in US stocks overnight.
"That's what provided the impetus for our market at the open," Mr Nicholson said.
"We have managed to pare that back steadily throughout the day and that's mainly due to the banks which have been able to find some buying throughout the day."
The local bourse fell on the back of overnight drops on Wall Street and further slips in commodity prices.
Mr Nicholson said US dollar strength after the US interest rate rise had put further pressure on commodities prices and traders in the US were worried about further weakness in junk bonds.
This was weighing on oil prices which are trading around 2003 levels in inflation-adjusted terms.
"The concern is that we could be seeing a wave of energy-related defaults and bankruptcies and the big concern is whether those bankruptcies could spill over into other parts of the financial sector," he said.
"As we've seen in the GFC, the contemporary financial sector is heavily integrated and if there is a big enough crisis that could affect financial institutions."
These worries were preventing a Santa rally, he said.
Among the big banks, Commonwealth Bank rose 88 cents to $81.57, Westpac rose 10 cents to $32.28, but NAB fell 16 cents to $28.78 and ANZ lost five cents to $26.48.
The big miners were under pressure amid lower commodities prices, with BHP Billiton down 15 cents to $16.87 and Rio Tinto fell 90 cents to $42.46.
In the energy space, Woodside Petroleum shares were down six cents at $26.76 while Oil Search shares were eight cents lower at $6.03.
* At the close on Friday, the benchmark S&P/ASX200 index was 4.7 points, or 0.09 per cent, higher at 5,106.7.
* The broader All Ordinaries index was up 5.9 points, or 0.11 per cent, at 5,156.5.
* On the ASX, the March share price index futures contract was 11 points higher at 5,065, with 35,044 contracts traded.
* The price of gold in Sydney at 1700 AEDT was $US1055.70 per fine ounce, down $US10.62 on Thursday's price of $US1,066.32.
* National Turnover was 2.7 billion securities traded worth $8.9 billion.