China stocks plunged more than 6 per cent on Tuesday after yet another late bout of panic selling triggered by a resumed slide in global equity markets and oil prices.
The CSI300 index of the largest listed companies in Shanghai and Shenzhen fell 6.0 per cent to 2,940.51 points, while the Shanghai Composite Index lost 6.4 per cent, to 2,749.79.
By midday, both indexes had been down around 2 per cent.
After a rebound on Friday and early Monday, crude prices fell back below $30 a barrel, not far from last week's 12-year lows, ending a couple of days of gains for Wall Street stocks.
China's fickle stock markets have slumped about 18 per cent so far this year on concerns about the slowing economy and confusion over the central bank's foreign exchange policy.
Many investors have lost the stomach for the market after a wild ride since last summer, when shares crashed 40 percent. Beijing intervened to stem that rout and orchestrate a recovery of sorts, but anyone who mistook that for a bottom and bought in will have lost their shirt again in January.
"The market is still seeking a bottom, though the pace of decline is getting slower," said Chang Chengwei, analyst at brokerage Hengtai Futures.
"Volume is getting very thin, as there is hardly any fresh inflows, and the process of deleveraging is continuing."
China's outstanding margin loans - money investors borrow to buy stocks - declined for 16 consecutive sessions to January 22, the longest losing streak on record, with 209 billion yuan ($32 billion) worth of leveraged bets unwound during the period.
YUAN STRAINS
Investors remain wary about further weakness in the yuan, too, despite assurances from Beijing that it has no intention of pushing it lower to gain a competitive advantage.
Chastened by the market's bearish reaction to an early January depreciation in the yuan, the People's Bank of China (PBOC) has since kept the yuan's daily midpoint fixing little changed.
In a move that could help ease market strains, Japan and China, Asia's two largest economies, said on Tuesday they were working to create a new framework to discuss economic policy coordination, such as steps to stabilise the yuan, the Nikkei newspaper said on Tuesday.
China's central bank has jolted global financial markets twice in six months by allowing sharp, sudden slides in the currency, only to step in aggressively to stabilise it.
The central bank has also been making plenty of liquidity available to the banking system to avoid any tightness ahead of the Lunar New Year celebrations. Traders said on Tuesday that the bank would inject 440 billion yuan into the money markets, the biggest daily injection in three years.
The decline in the yuan and concerns about the country's growth prospects have fuelled a flight of capital out of the world's second-largest economy which policymakers are struggling to contain.
January has already seen a slew of weak economic data, and on Tuesday the nation's top economic planner said rail freight, a barometer of industrial activity, fell 11.9 per cent by volume last year.
All eyes will be on a US Federal Reserve meeting this week to see whether it acknowledges concerns over the faltering Chinese outlook and global market turmoil and whether that will delay any interest rate increases this year.