Early in the session stocks plummeted by more than 80 points to an intraday low of 4058.4 points, but within two hours had gained back more than 100 points to hit an intraday high of 4167.40.

Trading remained volatile for the whole session with another downward swing coming just before the Australian Bureau of Statistics announced an unexpected 0.1% rise in the unemployment rate to 5.1% for July.

However, the data then spurred speculation of an interest rate cut, which pushed banks higher.

“The Australian unemployment data was quite weak,”Bloomberg quoted Plato Investment Management senior portfolio manager Manoj Wanzare as saying.

“The market is pricing a higher probability that Reserve Bank of Australia might need to move away from a normal stance towards a more ‘crisis policy implementation’ stance leading to a rate cut.”

Telecommunications stocks surged on better than expected results from Telstra, while financials closed higher.

The increases were partially offset by weakness in miners, though gold producers were some of the biggest gainers in the S&P/ASX 200 after gold hit a fresh record of $US1817.60 per ounce overnight.

The key index closed just 0.01%, or half a point, lower at 4140.8 points.

After a 4.5% gain yesterday, Rio Tinto closed 2.7%, or $A1.94, down to $70.41, while BHP Billiton lost 1.2%, or 47c, to $37.93.

Like other gold stocks, Newcrest Mining bucked the trend, jumping 3.8%, or $1.49, to $40.74, while Kingsgate Consolidated soared 7.3%, or 57c, to $8.40.

Spot gold was last trading at $US1786.22/oz.

Despite releasing improved earnings and profit, Alumina slumped 5.8%, or A11c, to $1.79 after its New York listing fell the same on Wednesday.

Meanwhile, the early signs are good for the US market ahead of Thursday’s opening bell with the Dow Jones Industrial Average Futures index trading 160 points higher this afternoon.