Chinese stocks volatile a day after sharp sell-off

People walk along a pedestrian bridge with a screen showing Chinese stock prices crashing, Shanghai, January 7, 2016.

U.S. stocks have extended the sharp losses of this week, putting the Dow on track for its worst start to a year in more than a century.

Germany’s DAX Index advanced 0.6 percent, recovering the 10,000 level it fell below for the first time since October on Thursday.

Amid the respite in markets on Friday, investors will look toward USA payrolls data for clues on the pace of Federal Reserve interest-rate increases.

The Dow Jones industrial average closed down 392 points, or 2.32%, to 16,514, the S&P 500 had lost 47 points, or 2.37%, to 1,943 and the Nasdaq Composite had dropped 146 points, or 3.03%, to 4,689.

NEW YORK (AP) – Stocks and oil prices plunged again Thursday on spreading fears that China’s economy, a major engine of global growth, is sputtering. Citigroup gave up $1.24, or 2.5 percent, to $48.88. Major European indexes dropped around 3 percent while Wall Street was set to fall on the open. The Shenzhen Composite Index for China’s second smaller stock exchange slumped 8.3 percent to 1,955.88.

China opted to shut down its markets thanks to its new so-called circuit breaker rule, which pauses trading if China’s CSI 300 Index goes down by 5 percent and ends it for the day if it dips to the 7 percent threshold.

The Shanghai and Shenzhen stock exchanges, however, said China would suspend using the circuit breaker as of Friday.

It appeared the “National Team” responded Friday by “intervening heavily”, said Nicholson. “China’s stock market reform will remain a messy affair”.

Elsewhere, Australian markets slipped lower, with the ASX 200 down 0.46%, Japan’s Nikkei 225 higher 0.37%, while Korea’s Kospi index was down 0.15%.

SHANGHAI Chinese markets face a day of high drama as share trading resumes with no automatic mechanism in place to restrict selling and the world watches to see if Beijing will allow its currency to fall yet further.

The American currency has risen over the past year, leaving the yuan overvalued compared with other developing countries and hurting Chinese exporters.

On Thursday, authorities lowered the yuan’s central rate against the USA dollar by 0.51% to 6.5646, the lowest since March 2011.

“Panic is at play here, and having the (People’s Bank of China) trying to stem the losses by imposing all sorts of rules and regulations does not help over the longer term, ” said Douglas Porter, chief economist with BMO Financial Group, in a morning note to clients. Those worries about China have drowned out signs that the economies of the US and Europe are doing fairly well.

Stock shares fell seven percent in value before trading was halted. Brent crude, the benchmark for global oils, lost 48 cents to $33.75 a barrel in London.

The Japanese yen, last down 0.4% against the USA dollar, has gained 2.4% this week alone as investors sought havens. The dollar fell to 117.750 yen from 118.38 yen.