"Obviously the liquidity isn't really that great at the moment, being holiday season and all," said Damien Boey, equity strategist Credit Suisse. "I think that in the Australian market context we are kind of torn between a few forces but on balance they are bearish," he added. The market sentiment continues to echo news out of Europe and Mario Draghi, president of the European Central Bank, said overnight that the economic outlook contained substantial downside risks, adding that 2012 would be a difficult year for banks. "Investors are thinking a lot about Europe and the uncertainties that are there, I think they are also paying a lot of attention to China and in particular the property market there," said Boey. Data out of China over the weekend showed China's November housing prices increased at the slowest rate this year while housing inflation was the lowest as tightening efforts took affect. The benchmark S&P/ASX 200 index slipped 7.3 points to 4,053.1, according to the latest available data. The benchmark fell 2.4 percent to a three-week closing low on Monday. New Zealand's benchmark NZX 50 index fell 0.7 percent to 3,202.0. Shares in Cochlear Ltd, the world's biggest maker of hearing implants, bucked the trend to jump 16.4 percent to the highest close in more than three months after announcing it had discovered the root cause of the failures of its top-selling implant, clearing the way for a return to market. Most retailers recouped some falls after bruising losses in the previous session. However, shares in surfwear firm Billabong continued to slide, losing another 12.8 percent to a record low after plummeting 44 percent on Monday on a warning that its first-half earnings would slump by 21-25 percent. Shares in Gloucester Coal were put in a trading halt after sources said Chinese-controlled Yancoal Australia is in talks to buy the company, currently worth $1.4 billion, to create Australia's top independent coal miner. Shares in Australia's Newcrest Mining, fell 3.2 percent after the world's third-largest gold producer on Monday cut its full-year output guidance by around 6 percent, citing disruptions and lower grade ore at mines in Papua New Guinea and Australia.