Australian shares have edged lower after falls on Wall Street as investors worried US politicians will not agree on measures to avert spending cuts and tax increases before the end of the year.

At 1035 AEDT on Thursday, the benchmark S&P/ASX200 index was down 3.4 points, or 0.07 per cent, at 4,631.8, while the broader All Ordinaries index was down 1.5 points, or 0.03 per cent, at 4,644.1.

On the ASX 24, the March share price index futures contract was five points lower at 4,608 with 1,115 contracts traded.

US stocks dropped as the chances of an agreement being reached on budgetary measures to address the so-called fiscal cliff before December 31 became more remote.

Members of Congress are expected to return to Washington in the early hours of Thursday in the United States to resume talks.

The Dow Jones Industrial Average dropped 24.49 points, or 0.19 per cent, to 13,114.59.

“We expect to see a relatively subdued session until we get further leads on the fiscal cliff negotiations heading into the end of the year,” IG Markets strategist Stan Shamu said.

Developments in Japan could also be an influence on the market, Mr Shamu said.

“Today is a significant day for Japan after Shinzo Abe was appointed prime minister and announced his cabinet yesterday,” he said.

“It is probably only a matter of time before we start hearing rhetoric from some of the ministers, which could have a bearing on trade.”

In early trade on the local market, mining stocks posted the largest gains.

Fortescue Metals was a standout, up 11 cents, or 2.5 per cent, at $4.46 after announcing it would resume work to expand the Kings deposit at its Solomon iron ore mining hub in January after a pick up in commodity prices.

BHP Billiton had added 17 cents to $37.03 and Rio Tinto was was up 37 cents at $65.21.

Retailers also posted gains, although more modest, after reports of relatively strong sales on Boxing Day.

Myer was up two cents at $2.09, David Jones had added two cents to $2.36, Harvey Norman gained half a cent to $1.86 and JB Hi-Fi was six cents higher at $10.29.

Bank shares were lower though, with Westpac down 11 cents at $26.06, Commonwealth off 16 cents at $62.17, ANZ down eight cents to $24.89 and NAB four cents lower at $24.84.

National turnover was 170.3 million shares worth $125.5 million, with 246 stocks up, 221 down and 224 unchanged.