Australian shares have turned lower in a shortened trading session on Friday as surging coronavirus infections clouded sentiment, prompting some profit taking after a bumper year of gains.

The benchmark S&P/ASX200 index was down 43.2 points, or 0.57 per cent, to 7470.2 points at 1200 AEDT on Friday.

The index has risen nearly 14 per cent this year following a pandemic-hit 2020.

The All Ordinaries index fell 41.1 points, or 0.52 per cent, to 7802.6 points.

Weak trading was expected after shares dropped overnight on Wall Street in thin trading volumes, and sentiment turned more cautious amid a surge in local COVID-19 cases, with Australia crossing 25,000 daily infections for the first time since the pandemic began.

NSW reported 21,151 new infections and six deaths on the final day of 2021, while Victoria posted a record 5919 new cases.

Losses in the local market were broad-based, with every single sectoral index trading in the red.

Heavyweight financial stocks were among the worst affected, including each of the Big Four banks, down between 0.6 and 1.5 per cent.

Among the big miners, Fortescue was up 1.3 per cent at $19.39, while Rio edged higher, helped by a bump up in iron ore prices. Safe haven gold stocks were the only other segment of the mining sector trading higher, with Newcrest, Northern Star and Regis Resources gaining between 1.5 and 2 per cent.

Energy and healthcare stocks were down 0.5 per cent and 0.4 per cent, respectively.

Among the rare stocks that bucked the trend, shares in Bega Cheese climbed 6 per cent to $5.83 on top of the nearly 4 per cent gains on Thursday.

The stock has been in the limelight after news that billionaire Andrew Forrest’s private investment group Tattarang has acquired a 6.6 per cent stake in the owner of the Vegemite and Farmers Union brands.

Meanwhile, the Australian dollar was largely steady, buying 72.54 US cents at 1200 AEDT, compared to 72.50 US cents at Thursday’s close.

-AAP