An early bounce for Australian shares fell away as hopes of Middle East de-escalation faded on reports US Gulf allies were taking steps to enter the conflict.
After spiking 138 points at Tuesday's open, the S&P/ASX 200 ended the session 13.5 points higher, up 0.16 per cent, to 8,379.4, while the broader All Ordinaries gained 18.7 points, or 0.22 per cent, to 8,571.3.
Global sharemarkets had earlier surged on easing oil prices, following disputed reports that the US was in talks with Iranian officials. But confidence faded after Saudi Arabia reportedly took steps to give the US military access to one of its air bases.
The WSJ also reported videos had shown missiles used in attacks on Iran had been launched from Bahrain.
The Australian dollar is buying 69.66 US cents, up slightly from 69.63 US cents on Monday at 5pm.
