Australian stocks fell 1.0 percent on Tuesday on profit-taking in bank shares after two straight days of gains and on investor caution ahead of the corporate earnings season. Commonwealth Bank of Australia led bank shares lower with a 2.4 percent drop to A$56.64 as sector valuations were getting high and shares retreated from their knee jerk surge after CBA's profit upgrade late on Friday.

The benchmark S&P/ASX 200 index fell 49.9 points, to 4,861.2, after rising 0.2 percent on Monday. Turnover remained below normal with dealing desks and fund managers not returning to full staffing levels from summer holidays until next week. Share registry business Computershare jumped 8.2 percent to a record closing high of A$12.40 after it upgraded its earnings outlook, boosted by projects including IPOs in Hong Kong.

The company said first half EPS would be about 20 percent higher than a year earlier. Also boding well for the forthcoming reporting season was travel retailer Flight Centre, which jumped more than 10 percent to a one-year high of A$19.51 on a profit upgrade.

Copyright Reuters, 2010