Mining and energy shares bounced back from Monday's big losses across the market but falling bank stocks kept the ASX flat.
Iron ore miners were up by one per cent or more despite the price of the steel-making commodity falling below $US100 per tonne. The price was more than $US200 per tonne earlier this year.
Iron ore specialist Fortescue was higher by 2.65 per cent to $15.09 at 1200 AEST on Tuesday.
BHP and Rio Tinto shares gained more than one per cent.
The big four banks were lower. NAB fared worst and shed 1.28 per cent to $26.99.
The prospect of Chinese property giant Evergrande defaulting on a mountain of debt may have implications for banks across the region.
Evergrande is due on Thursday to pay $US83.5 million ($A115.2 million) in interest relating to its March 2022 bond.
It is not known whether Australian banks are owed money from Evergrande.
The benchmark S&P/ASX200 index was lower by 5.5 points, or 0.07 per cent, to 7242.7.
The All Ordinaries was down by 4.2 points, or 0.05 per cent, to 7533.7.
The market has done better than the US lead. Wall Street plunged as fear of contagion from the potential collapse of Evergrande prompted a sell-off.
Investors may also be nervous ahead of the US Federal Reserve's policy meeting this week.
In Australia, the Reserve Bank has warned recovery from the expected economic downturn in the September quarter could be slower than previously experienced in the pandemic.
The central bank in its meeting minutes said consumers and business may be cautious about spending after lengthy lockdowns.
On the ASX, Victorian electricity operator AusNet has a second suitor.
Energy provider APA Group has joined the bidding war and has offered $2.60 per share.
This is more than Brookfield Asset Management's offer of $2.50 per share.
Trading in AusNet shares was paused. The shares last swapped for $2.36.
APA Group shares were down 4.05 per cent to $8.52.
Among the energy providers bouncing back from Monday's steep falls was Woodside Petroleum. Shares were up 2.25 per cent to $21.04.
Clothing group Kathmandu posted an improved full-year profit although this was largely due to the addition of Rip Curl.
Net profit after tax was $NZ63.4 million for the 12 months to July 31.
Sales in the first six weeks of this financial year were down due to coronavirus lockdowns.
Shareholders will receive a fully franked final dividend of three NZ cents per share. No final dividend was paid last year.
Shares on the ASX were down 1.74 per cent to $1.40.
The Australian dollar was buying 72.67 US cents at 1200 AEST, higher than 72.33 US cents at Monday's close.Internet Explorer Channel Network