After being up by as much as 0.8 per cent in early trading, the benchmark S&P/ASX200 index closed on Thursday up just 1.3 points, or 0.02 per cent, at 7,325.0.
The broader All Ordinaries added 3.6 points, or 0.05 per cent, at 7,541.9.
The retreat came after the Australian Bureau of Statistics reported the unemployment rate held steady at 3.5 per cent in June, with another 33,000 new jobs created - more than twice the 15,000 economists had forecast.
Betashares chief economist David Bassanese said the second straight stronger-than-forecast monthly labour market report would keep the pressure on the Reserve Bank of Australia to lift interest rates further.
He said much depended on the outcome of next Wednesday's June quarter consumer price index.
"Next week's CPI result remains critical," Mr Bassanese said, adding an annual inflation rate with a "five handle" - that is, under 6.0 per cent - would likely be enough to forestall an August 1 rate hike.
Investors were also digesting a spate of mining production reports and pre-audited earnings statements.
BHP dipped 0.1 per cent to $44.62 as the Australia's largest company announced it had achieved full-year production guidance for copper, iron ore, coking coal and energy coal.
RBC Capital Markets analysts Tyler Broda and Kaan Peker called it a "another solid operational quarter" for the Big Australian, which they said was continuing to execute in its key areas.
Mineral Resources grew 5.2 per cent to $75.78 after Chris Ellison's company pulled out of billion-dollar deal to acquire a stake in a downstream lithium hydroxide plant in China from US lithium giant Albermarle.
Rio Tinto added 0.4 per cent to $116.43 and Fortescue Metals had advanced 1.4 per cent to $22.59.
In tech, Nuix soared 36.6 per cent to a three-month high of $1.12 after the data intelligence company said it expected to announce underlying full-year earnings had grown 50 per cent to about $44m to $47m as efforts to control costs paid off.
In the heavyweight financial sector, QBE was up 2.4 per cent to $15.60 as the insurer previewed its first-half results and said recent momentum in premium growth had continued.
The big four banks were mixed, with CBA up 0.6 per cent to $105.25 and ANZ adding 0.3 per cent to $22.12, but ANZ dropping 0.4 per cent to $25.35 and NAB dipping 0.1 per cent to $27.94.
In the consumer staples sector, Endeavour Group gained 0.3 per cent to $5.91 after the pub owner said it would implement gaming reforms announced by the Victorian government as soon as possible.
In consumer discretionaries, Flight Centre gained 4.0 per cent to a two-month high of $21.65 after upgrading its full-year guidance by about seven per cent, to about $300m.
"Overall, we are pleased with our continued recovery as demand has generally rebounded solidly across both our leisure and corporate travel businesses," managing director Graham Turner said.
In health care, Telix Pharmaceuticals slid 14.6 per cent to a six-week low of $10.38 despite Australia's second-biggest biotech reporting its quarterly revenue had grown 21 per cent to $120.7m on strong continued sales of its prostate cancer imaging agent, Illuccix.
In energy, Stanmore Resources grew 5.8 per cent to a four-week high of $2.73 after the coalminer reported it had ended the June quarter with a "remarkable" net cash balance of $US70m despite a number of capital expenditures.
In currency, the Australian dollar jumped to a three-day high as traders bet the strong jobs report would lead to higher interest rates.
The Aussie was buying 68.28 US cents, from 67.92 US cents at Wednesday's ASX close.
ON THE ASX:
* The S&P/ASX200 index finished Thursday up 1.3 points, or 0.02 per cent, at 7,325.0.
* The All Ordinaries gained 3.7 points, or 0.05 per cent, to 7,541.9.
CURRENCY SNAPSHOT:
One Australian dollar buys:
* 68.28 US cents, from 67.92 US cents at Wednesday's ASX close
* 95.16 Japanese yen, from 94.58 Japanese yen
* 60.86 Euro cents, from 60.52 Euro cents
* 52.81 British pence, from 52.39 pence
* 108.61 NZ cents, from 108.59 NZ cents.
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