World stocks slide as China trading halted after plunge

But the prospect Beijing would close such a large gap fueled fears it might lead to an outflow of capital, weakening China’s economy and reducing the supply of money to support share prices.

The China Securities Regulatory Commission is holding an internal meeting to discuss market conditions and the nation’s new circuit breakers, the person said, declining to be named because he wasn’t authorised to speak publicly.

China was hoping the introduction of circuit breakers would help prevent a repeat of last summer’s market crash. Major European indexes dropped around 3 per cent while Wall Street was set to fall on the open. Ensco dropped 5 percent.

Tokyo stocks closed 0.99 percent higher August 13, rallying after the previous day’s losses as investors gauged the impact of China devaluing its currency for the third day in a row. Trading ultimately had to be halted after just 30 minutes.

In 15 minutes of trading time before the time of the halt, the Shanghai Composite had tumbled 7.32 percent while the Shenzhen Composite plummeted 8.34 percent.

Analysts said Beijing’s introduction of the circuit breaker mechanism had proved counter-productive and investors were panicked they would not be able to sell shares they do not want, rather than reassured over market stability.

Currencies around the region were sent reeling – the Australian dollar, often used as a more liquid proxy for the yuan given Australia’s vast exposure to China, fell half a USA cent in short order. Brent crude, a benchmark for worldwide oils, fell $1.14, or 3.3 percent, to $33.09 a barrel in London. Spot yuan (CNY=CFXS) fell to 6.5945 to the dollar, its weakest since February 2011.

“Investors recognize that the [central bank’s] actions serve as confirmation that China’s economy is slowing in a meaningful fashion, which has real repercussions on global … growth”, Mike O’Rourke, chief market strategist at JonesTrading, wrote in a note.

On Thursday, regulators announced new rules that will sharply limit stock sales.

“The volatility in the FX market amplifies those macro concerns and that’s clearly not a positive for the stock market”.

The Chinese government spent at least 1.5 trillion yuan ($236 billion) on the 2015 market bailout, according to analysis by Goldman Sachs.

It was this current week’s 2nd daylong suspension after a plunge in costs Monday. tripped the same “circuit breakers” in that have been introduced January 1.