High dividend paying stocks helped lift the benchmark S&P/ASX 200 index 3.9 points, or 0.07 per cent, to 5629.8 points. The broader All Ordinaries Index meanwhile added 4.7 points, or 0.08 per cent, to close at 5629.3 points.

The slight gains came after the Australian Bureau of Statistics revealed that local companies, on average, posted a 6.9 per cent fall in gross profit for the second quarter.

Rivkin global investment manager Tim Radford said the soft data might mean that the Reserve Bank, which will hold its monthly interest rates on Tuesday, could return to an easing cycle after adopting a more neutral in past months.

"Now we have had some mixed economic data that's come out of Australia and I think there are some signs that Australia's economy is not in as good a position as we thought," Mr Radford said.

"I do think that interest rates will stay lower for longer now than previously expected. If we do see that bias change back to more of an easing bias and to more of a dovish tone … that will bode well for the higher dividend ratio areas of the local share market."

A private gauge of Australian price pressures added to expectations of prolonged low interest rates. TD Securities-Melbourne Institute's monthly measure showed consumer price inflation at its lowest in seven months in August after higher readings in the second quarter.

Mr Radford said a more dovish tone would be good for business for the top four banks, which write more loans during low interest rates.

But Westpac was the only bank to finish in positive territory, firming 0.3 per cent to $35.14. The other lost their pulse, with Commonwealth Bank and NAB dipping 0.02 and 0.2 per cent to $81.30 and $35.12 respectively. ANZ was unchanged at $33.43.

The share market barely registered lower-than-expected manufacturing data from China. The official purchasing managers index (PMI) lost momentum for the first time in six months in August, with a reading 51.1 compared with 51.7 in July.

Mr Radford said this could prompt the Chinese government to introduce more projects to stimulate the economy which would boost the shares of Australia's big miners.

Beijing has launched a series of measures since April to bolster growth, including tax breaks for small enterprises, targeted infrastructure outlays and incentives to encourage lending in rural areas and to small companies.

BHP gained 0.08 per cent to $36.70, while rival Rio Tinto strengthened 0.3 per cent to $62.80.

"It's been a pretty flat session," Mr Radford said, adding that investors largely stuck to sidelines ahead of the release of local gross domestic product and retail sales data on Wednesday and Thursday, respectively, interest rate decisions from the European Central Bank and the Bank of England on Thursday night and US jobs data on Friday.

CMC Markets chief strategist Michael McCarthy said investors were "in the eye of an information hurricane".

"Sandwiched between the just completed company reporting season, and ahead of a central bank and macro data packed week, shares marked time on low volumes," Mr McCarthy said.

"After an initial burst of enthusiasm, shares settled over the rest of the session. China manufacturing data dampened sentiment, and ahead of RBA and ECB decisions this week, and a rain of global data, investors largely waited for the next shoe to drop."

Elsewhere, electronics retailer Harvey Norman surged 3.7 per cent to $3.68 after posting its first profit growth in three years last Friday, with a 49 per cent rise.

Westfield's shopping centre landlord, Scentre Group jumped 1.8 per cent to $3.49, following reports it was in talks to sell half of its New Zealand portfolio, which is worth about $2.6 billion.

Telstra rose 0.4 per cent to $5.58, clawing back some losses after trading ex-dividend last week. Meanwhile, a broker downgrade weighed on Woolworths, which eased 1.2 per cent to $35.71.