Chinese stocks tumble again at open, falling 6 percent

Shanghai: Shanghai stocks tumbled 6.41 per cent in early trading on Tuesday, extending the worst plunge for eight years after worries China’s faltering economy could hurt global growth sent world markets nosediving.

U.S. stock futures also gained 2.0 percent in Asia, paring a part of its 5-percent fall the previous day.

Shortly after the opening bell, the Dow Jones Industrial Average surged 331.04 points (2.09 percent), to 16,202.39.

Stock investors used their accounts on China’s social networking platform Sina Weibo to express their frustrations as their investments slid even further than last week, the BBC reported Monday.

Elsewhere, markets steadied, with European stocks trading higher.

Analysts said that the sell-off is a long-overdue correction that is unlikely to undermine support for US stocks moving forward. On Tuesday, China’s benchmark index lost another 7.6%, falling under its 3,000 mark, seen as a psychological barrier, for the first time in 2015. The main stock index in Shanghai fell more than 7 percent and has now lost more than 40 percent of its value in a two-month crash.

Chinese state media dubbed yesterday’s decline “Black Monday”, with the poor stock performance coming after a summer of market downturn in the country that hosts the world’s second-largest economy.

The Dow fell 1,089 points within the first four minutes of trading as traders dumped shares.

The central bank also increased the amount of money available for lending by reducing the reserves banks are required to hold.

Tokyo’s Nikkei 225 earlier closed down 4 percent after sliding 4.6 percent Monday.

It meant the blue-chip share index had recovered most of the losses suffered on Monday when it dived by 4.7% – a slump that came at the end of 10 days in a row of declines in the FTSE 100’s worst losing streak since 2003.

Underlining concerns about China, Japanese Finance Minister Taro Aso said on Tuesday he hoped China would take action to stabilise its economy and that Tokyo had no plan for now to unveil its own new economic stimulus package.

But some economists argue that the massive drop on Monday was an overreaction. The euro slipped 0.7% to $1.1531 while the yen retreated to ¥120.02 to the dollar.

Oil prices also steadied, with Brent crude 3.3% higher at $44.04 a barrel.