China’s stock markets tumble for second day

European markets continued to fall during the trading session as fears of currency wars ignited a fresh bout of selling across global markets.

TORONTO STOCKS: The Toronto Stock Exchange posted triple-digit gains in early trading, up 309.91 points, or 2.4 per cent, from Monday’s close. The Standard & Poor’s 500 sank 3.9 per cent, putting it in correction territory, meaning it had fallen at least 10 per cent from a recent peak. The Stoxx 50 index closed down 5.61 per cent on Monday.

Problems in China’s stock market don’t indicate problems in the U.S. stock market, nor does a slowing Chinese economy translate into trouble for the U.S. economy, Gus Faucher, senior economist at PNC Financial Services Group, told CBS MoneyWatch.

The Dow ended the day with a loss of 204.91 points, or 1.3 percent, at 15,666.44.

The blue-chip CSI300 index fell 7.1 percent to 3,042.93, while the Shanghai Composite Index lost 7.6 percent to 2,964.97 points.

When US markets opened yesterday afternoon British time, the Dow Jones briefly plummeted around 1,000 points on opening before clawing back the losses. Exports contracted more than 8 percent year-on-year.

Shares in Taiwan bounced back on Tuesday after the government in Taipei announced plans to inject funds from the state-owned National Stabilization Fund into the stock market to “bolster investor confidence”, after the nation’s bourse suffered the worst day in its history on Monday. The stock surged 16.4 per cent after its fiscal second-quarter results handily beat analysts’ estimates as shoppers picked up major appliances, large screen televisions and mobile phones. The previous market correction was almost four years ago.

“Whatever I have, I have to anticipate it’s going to be probably 30 to 40 percent less”, one investor told 1010 WINS’ John Montone. Britain’s FTSE 100 was 3.4 percent higher.

But the rebound really gathered momentum as China’s central bank slashed interest rates, an emergency action aimed at calming financial markets and boosting economic growth.

“Currently, there is still downward pressure on China’s economic growth”, the central bank said in a separate statement.

China’s Central Bank said the rate reduction would cut “the social cost of financing to promote and support the sustainable and healthy developments of the real economy”.

In currency markets, the dollar rose to 119.66 yen from Monday’s 118.69 yen.

The euro fell to $1.1494 from the previous session’s $1.1591Oil rebounded from Monday’s steep declines. Brent crude, a benchmark for global oils used by many U.S. refineries, gained 52 cents, or 1.2 percent, to $43.21.

OTHER COMMODITIES: The October natural gas contract rose two cents to US$2.67, while the December gold contract was down $16 at US$1,137.60.