SYDNEY (AFP) -- Australian share prices closed down 0.16 percent following a significant fall in base metal prices in London ahead of the weekend, dealers said.

They said investors sold resource stocks following a metal sell-off in London trading on Friday and this weighed on market leading miners BHP Billiton and Rio Tinto while banks countered this slide.

The benchmark S and P/ASX 200 fell 9.4 points to 5,822.1 and the broader All Ordinaries index dropped 9.3 points to 5,805.1.

A total of 1.78 billion shares worth 4.88 billion dollars (3.78 billion U.S.) changing hands. Falls outnumbered rises 710 to 519 while 351 stocks were unchanged.

"It was pretty much a balancing act between commodity stocks and defensives," Bell Potter Securities private client advisor Stuart Smith said. "People are getting frights all over the place but these frights are far too premature and I think BHP and Rio Tinto are cheap at these prices -- the theory of buy on the dips is still valid."

BHP Billiton, which is expected to announce a record first half profit of 6.3 billion U.S. dollars later this week, fell 0.18 dollars or 0.68 percent to 26.41 dollars while Rio Tinto dropped 1.75 dollars or 2.27 percent to 75.49 dollars.

Among other miners, Alumina fell 0.03 to 6.91, Zinifex lost 0.81 to 15.99 and Kagara Zinc slipped 0.23 to 5.11.

Gold miners Newcrest and Oxiana fell after gold prices dropped Friday. Newcrest lost 0.20 to 21.11 and Oxiana dropped 0.09 to 2.69 but Lihir Gold gained 0.01 to 3.16.

The major banks were mixed. Commonwealth Bank shares added 0.10 to 50.44 but National Australia Bank lost 0.09 to 40.71, ANZ slipped 0.03 to 29.38 and Westpac shed 0.21 to 25.19. The country's biggest investment bank Macquarie Bank gained 0.56 to a record 83.88.

Dominant telco Telstra gained 0.03 to 4.24 while rival SingTel climbed 0.10 to 3.02.

National airline Qantas fell 0.02 to 5.37 and budget rival Virgin Blue eased 0.01 to 2.59.