The Shanghai Composite closed down 3.4% and the smaller, tech-heavy Shenzhen index lost 3%.
“Investors are also scared that after many companies revealed the share stake holdings of the “national team”… there won’t be any more moves left, since the state has already bought so much stock to support the market“, he said.
European equity markets meanwhile dropped “as once again weaker markets in Asia are souring sentiment for investors”, said Markus Huber, senior analyst at brokers Peregrine & Black.
“State forces or measures are the main forces supporting the market right now”.
The wild price swings threaten to disrupt the party’s plans to use China’s stock markets to raise billions of dollars for state companies to pay off debts and modernize.
Sources familiar with the medium-term funding plan said this would help offset the drain on liquidity caused by China’s unexpected devaluation of the yuan last week.
U.S. stocks are opening lower as investors react to falling markets in Europe and Asia, and wait for clues about interest rates from the Federal Reserve.
June disappointed with a decline of 0.2 per cent, but retailers will be hoping for a lift given the good weather at the beginning of July which could enhance Bank of England rate hike possibilities.
In Tokyo the greenback traded at 124.22 yen, slipping from 124.38 yen in New York late Tuesday. Brent crude, an worldwide benchmark, dipped 36 cents to $48.38.
China’s central bank provided 110 billion yuan ($17 billion) to 14 lenders on Wednesday.
Bucking the downtrend, the index’s top weighted stock Samsung Electronics inched up 0.3 percent, adding to Tuesday’s gain of 2 percent, on the back of bargain hunting. Australia’s S&P ASX/200 also dropped, losing 1.5 percent to 5,301.00.
Gold marched a head$11 to US$1,128.10 an ounce, marking its biggest single-session rally in a week as the TSX gold sector rose 3.7 per cent.
– Jakarta ended down 0.94 percent, or 42.33 points, at 4,441.91.
– The Shanghai Stock Exchange (SSE) has set up a registry for the “emerging industries companies board”, sources told the newspaper, adding it had also hired staff and brought in equipment. The FTSE 100 closed down 123 points at 6,403, its lowest close since January and more than 10 per cent below its recent peak in April.
– Mumbai fell 1.16 percent, or 323.82 points, to 27,607.82. The China Enterprises Index tumbled 1.19 percent to 10,642.24. The Hang Seng is now down 1.8% for the year. The region’s largest stock market, Japan’s Nikkei 225 index was down 0.4% at 20,142.81 points.