Chinese stocks fluctuate as worries linger over country's outlook

HONG KONG - Chinese stocks seesawed Tuesday as worries lingered over the country's financial markets and its economic outlook, fueling volatility in other Asian benchmarks.

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KEEPING SCORE: Japan's benchmark Nikkei 225 reopened after a holiday, falling 2.7 per cent to 17,214.87 as the index caught up with losses the previous day on other Asian markets. The Shanghai Composite Index in mainland China fluctuated between gains and losses and was 0.7 per cent higher at 3,036.84 by midafternoon. Other regional indexes opened higher but reversed course by the afternoon. Hong Kong's Hang Seng slipped 0.2 per cent to 19,838.77. South Korea's Kospi edged 0.2 per cent lower to 1,891.25 while Australia's S&P/ASX 200 dipped 0.1 per cent to 4,925.10.

CHINA VOLATILITY: Worries about the Beijing's ability to manage financial markets coupled with deepening fears about a protracted slowdown in the world's No. 2 economy continue to keep investors on edge after sharp losses over the past week. After losing 5 per cent the day before, stocks in Shanghai zigzagged throughout the day as they searched for direction. China's tightly controlled onshore yuan, which was the source of last week's market turmoil after authorities guided it sharply lower, was little changed. However, interbank rates spiked for the offshore yuan, which is freely traded in Hong Kong, leading many to believe China's central bank is intervening in the market in order to foil speculators trying to drive it lower.

QUOTABLE: "In the Chinese equity markets so much damage was done to investor confidence last week" by new "circuit breaker" trading halt mechanisms that backfired, said analyst Angus Nicholson of IG. "I think that has really done a significant amount of damage to Chinese investor confidence and confidence in the government's ability to manage and regulate Chinese capital markets," he said. "Concerns about how the Chinese economy is faring has only added to these other concerns. I think we still are seeing that today."

WALL STREET: Two of the big three U.S. benchmarks finished slightly higher Monday after mounting a last-minute comeback, snapping a three-day losing streak. The Dow added 0.3 per cent to close at 16,398.57 while the S&P 500 index rose 0.1 per cent to 1,923.67. The Nasdaq fell 0.1 per cent to 4,637.99.

ENERGY: Benchmark U.S. crude extended losses, falling 75 cents to $30.66 a barrel in electronic trading on the New York Mercantile Exchange. The contract dropped $1.75, or 5.3 per cent, to settle at $31.41 a barrel on Monday. The last time it finished lower was Dec. 5, 2003, when it closed at $30.73 a barrel. Brent crude, a benchmark for international oils, fell 99 cents to $30.89 a barrel in London.

CURRENCIES: The dollar edged lower to 117.24 yen from 117.63 in the previous day's trading. The euro rose to $1.0883 from $1.0861.


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