After falling by a total of 10 cents over the week, with Thursday's auctions leaving prices steady on the day, wool prices had stabilised but were showing no real signs of recovering, brokers and exporters said.

Chinese buying on Thursday did nothing to lift the market, they said.

With prices down by almost 40 per cent over the past eight months to four-year lows, the only slightly positive sign was a rise of about five cents in 21 micron greasy wool futures on the Sydney Futures Exchange on Thursday.

Sales to China were done at prices lower than auction levels as sellers competed to undercut each other, one broker told Reuters.

"Us exporters are desperate enough for business to undersell the market," an officer with exporter Techwool said.

This occurred as Chinese buyers followednormal practice by refusing to meet existing price levels in a weak market.

"They always fear it will be lower the next day so they're wanting to buy below the level the whole time," he said.

This added to the list of woes being expressed in the Australian wool industry about its biggest customer, China, as wool continues to slump.

The falling spot price of Australian wool increased the risk of earlier contracts being dishonoured by China, the Australian Council of Wool Exporters said.

The single source of support for the present wool market was shipment commitments, and much of the present market was done around prompt shipment basis, the Techwool officer said. "That's really the only thing that holds the market up nowadays," he said.

Wool was unchanged on Thursday at 527 cents a kg clean on the Australian Wool Exchange's eastern market indicator, despite orders for prompt shipment and comparatively minor sales by statutory authority Wool International from Australia's 1.1 million balewoolpile.

The slight rise in wool futures indicated wool may have bottomed and was showing some confidence, even though futures were slightly below physical prices, the Techwool officer said.

But most thought the market was still headed down.

"It has a little further to go," one broker said.

An officer with pastoral house Dalgety Wesfarmers said the general trade perception was still of downside risk.

"We're not even into a drastically volatile market, it's just steadily drifting off which tells you there's a lack of demand behind it," he said.

Next week's big offering of 117,000 bales would put further pressure on the market, he said.

The wool crisis is a recurrence of woes which have periodically gripped an industry once so important that Australia was said in the 1950s to "ride on the sheep's back".

An earlier collapse in Australia's wool market led to the introduction of a failed reserve price scheme which operated through the 1980s before being scrapped in 1991.

A plan by Australia'sfederal government to freeze sales from Australia's 1.1 million bale stockpile has been criticised by parts of the wool industry as a return to the same psychology which led to the introduction of the floor price regime.