The Australian share market had clawed back some losses at noon after Standard and Poor's downgraded the United States credit rating for the first time in history over the weekend.
After plunging four per cent on Friday, the local bourse was down more than two per cent in early trade, but regained some ground by midday.
At 1204 AEST, the benchmark S&P/ASX200 index was down 32.6 points, or 0.79 per cent, at 4,072.8 points, while the broader All Ordinaries index had backtracked 24.6 points, or 0.59 per cent, to 4,145.1 points.
On the ASX 24, the September share price index futures contract was down 17 points at 4,033 points with 48,575 contracts traded.
CommSec market analyst Juliette Saly said the domestic share market reacted with shock to US government debt being downgraded by ratings agency Standard and Poor's from AAA to AA+.
"But investors seem to have calmed down a bit this morning after we saw an initial sell out," Ms Saly said.
She said gold stocks fared well after the price of the precious metal hit a new record high of $US1,699.70 per ounce, up from $US1,651.80 on Friday.
Among gold producers at 1206 AEST, AngloGold Ashanti was up nine cents, or 1.13 per cent, at $8.03, Eldorado Gold Corp had added 37 cents, or 2.23 per cent, to $16.97 and Newcrest was 20 cents firmer at $39.40.
Ms Saly said positive corporate news helped to boost the market.
Bendigo and Adelaide Bank reported a 41 per cent increase in full year net profit to $342.1 million, but said it expects the market to remain volatile in the period ahead.
Shares in the bank were up nine cents, or 1.12 per cent, at $8.16.
While JB Hi-Fi posted a fall in 2010/11 net profit to $109.70 million, from $118.65 million for the previous financial year, it revealed plans to expand.
"It's going to open 16 new stores across 2012 and also the dividend they paid to shareholders looked okay, so JB Hi-Fi is bucking the trend in the retail space," Ms Saly said.
JB Hi-Fi shares were up 12 cents at $14.47.
Coal and Allied shares soared after its largest shareholders, mining giant Rio Tinto and Japan's Mitsubishi Development, made a conditional, incomplete and non-binding proposal for the shares in the miner they do not already hold.
Shares in Coal & Allied had surged $25.90, or 28.46 per cent, to $116.90 while Rio Tinto was down $1.68, or 2.33 per cent, at $70.32.
BHP Billiton had eased 60 cents, or 1.57 per cent, to $37.52.
Ms Saly said the energy sector also provided a boost, with Woodside up 77 cents, or 2.23 per cent, at $35.32, while Santos was 10 cents firmer at $11.62
The big four banks were mixed.
ANZ was down 12 cents at $18.98, Commonwealth Bank was 34 cents stronger at $46.60, Westpac was five cents higher at $19.32 and National Australia Bank was down 18 cents at $21.59.
National turnover at 1218 AEST was 1.46 billion shares, worth $3 billion, with 292 shares up, 724 down and 210 unchanged.
