China’s stock market continues its dramatic slide

The dollar rose about 0.1 percent in Asian trade to 124.1 yen – its highest level this week.

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The benchmark Shanghai composite index shrank 1.68 percent to close at 3,663 points. Shanghai stocks closed 2.20 percent lower, nearly wiping out a 3.44 percent rally on Wednesday.

By the time China’s Shanghai benchmark index peaked in early June, it was up 150 percent in the past year. Tokyo shed 1.07 percent, Sydney was 0.89 percent lower and Seoul retreated 0.83 percent.

Stocks in national defence and ship building led the gainers, while air transportation and medical service companies fell the most in the morning.

The worst drop in China’s stock market in eight years helped drag down other markets around the world Monday.

CHINA’S PLUNGE: The Shanghai index fell the most since February 2007 on Monday, plunging 8.5 percent despite a massive government intervention. Citing unidentified bank officials, the China Securities Journal said Chinese banks had been checking their exposure to the stock market via wealth management products and loans collateralised with shares. The market still looks jittery as analysts are skeptical about the measures of the Chinese government in the backdrop of economy slowdown. Meanwhile, Hong Kong’s Hang Seng Index declined just 0.5% to 24,498.

On Wall Street the Dow fell 0.73 percent on Monday while London, Paris and Frankfurt also lost ground on China worries. Zhang said the company will “increase its holdings” of stocks “at appropriate times” and will continue to fulfill its role in “stabilizing the market”.

Turkey and the United States have reached a deal in which Turkey will allow U.S. planes to utilize Turkish bases to attack Islamic State militants to establish a “de facto no-fly zone” in northern Syria, as indicated by WSJ. This left analysts guessing whether authorities strategically eased off on their support measures or whether the stock market was simply flooded with sell orders, driving down prices.

It also made major Chinese brokers promise to purchase stocks and hold on to them until China’s troubled markets showed signs of health.

Beijing’s response included an interest rate cut, the suspension of initial public offerings, relaxed margin lending and collateral rules and enlisting brokerages to buy stocks, backed by cash from the central bank. Expectations are split between September or December.

Another factor is the possibility of a hike in the US Federal Reserve’s interest rate.

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Brent crude, used to price worldwide oils, fell 72 cents to $52.74 after tumbling $1.15 on Monday to $53.47.

S A trader works on the floor of the New York Stock Exchange