Australian shares remain at the mercy of global worries, but buying support at the 5,000 point level indicates attractive values for investors, analysts say.
The benchmark S&P/ASX 200 index again dipped below 5,000 points in early trade on Monday, a level it hasn't been below at the end of a trading day for more than two years.
Shares slipped in early trade after falls on Wall Street and European markets late last week, but recovered ground to close at 5,030 points.
"The Australian market has been caught up in a global growth scare that originated from emerging markets but has now spread," AMP Capital chief economist Shane Oliver said.
"We are not being helped by the weak domestic economic data."
Global markets slumped in August, sparked by plunging Chinese shares, as worries of China's economic slowdown rattled investors across the globe.
On Monday, China lowered its economic growth figure for 2014 by 10 basis points to 7.3 per cent.
Locally, the economy slowed in the June quarter to its slowest growth rate since 2011, at 0.2 per cent.
Analysts say 5,000 points is providing technical support, with the S&P/ASX 200 index falling to that level several times in the last few weeks.
It's also a psychological level that reminds investors how attractive dividend yields are in Australia, IG markets analyst Angus Nicholson said.
"For people with a long-term time frame, the recent sell-off can be considered a good entry point. The selling in some of the stocks has been overdone," he said.
Companies with a global focus are still of interest for investors, and dividend yields are quite attractive, particularly for stocks including James Hardie, CSL and Qantas, according to analysts.
The main factor needed for a sustained recovery in shares is a more stable macro situation - both in Australia and China.
"If we see better data, maybe it will start enticing people to buy stocks that are, at what are, very reasonable valuations," Mr Nicholson said.
Dr Oliver said the recent weakness on the Australian market is not the start of a larger downturn.
"The falls in the Australian market have not been outsized," he said.
"It's more a correction on the back of a growth scare. I believe we have already seen the bulk of the damage."
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