The benchmark S&P/ASX 200 index had dropped 7.2 points to 4,378.3 by 0219 GMT. The index fell 0.5 percent on Monday.

Global miner Rio Tinto Ltd fell 1.7 percent and larger rival BHP Billiton Ltd slipped 0.6 percent.

Spot iron ore prices in top consumer China fell on Monday, reflecting limited interest among steel mills in restocking the raw material ahead of next week's public holidays given the uncertain outlook for steel demand. China is a key consumer of Australian ore.

Sentiment was also affected by data showing Germany's business confidence dropped in September to its lowest since early 2010.

"It is difficult to see what could encourage buyers to push the market higher. Market participants currently seem satisfied to take profits on recent gains," said Stan Shamu, a market strategist at IG Markets.

New Zealand's benchmark NZX 50 index rose 0.2 percent to 3,817.9.

STOCKS ON THE MOVE

Top banks were higher, with No. 3 lender Westpac Banking Corp leading with a 0.7 percent rise. Dominant telecoms firm Telstra Corp Ltd gained 0.6 percent. Investors focused on these stocks for their high dividend yields.

Bank and insurer Suncorp Group Ltd fell 1 percent. The company said it plans to raise A$350 million through convertible preference shares.