Dividend-heavy stocks, such as utilities, also gained.
Among Hong Kong blue chips, only the utilities sector posted a daily gain, helped by China Resources Power, which closed up 1.65 per cent at HK$19.70.
On Monday, the government said that profits of major industrial firms slipped 0.3 percent year-on-year in June to 588.57 billion yuan.
Monday’s 8.48 percent fall in Shanghai was the biggest drop since February 27, 2007 and sent tremors through global bourses.
On Wall Street the Dow fell 0.73 percent on Monday while London, Paris and Frankfurt also lost ground on China worries.
After a plunge of more than 8 per cent in major indices on Monday, Chinese regulators said they were prepared to buy shares to stabilise the stock market, while the central bank injected cash into money markets and hinted at further monetary easing.
And the fear that even more liquidity may be removed from the stock market was enough to give investors in Chinese equities the jitters. Analysts said economic and social stability outweighed such considerations.
“The worst time has passed but we think there is a final leg for this correction”, Steve Yang, strategist at UBS Group AG, said.
In a rare acknowledgement of the growth challenges faced by China, state radio quoted the Politburo as saying the country had yet to find new drivers to power its economy at a time when old engines were flagging. Shenzhen fell 7.59 percent to close at 12,493.05 points. The market had surged more than 150 percent in the year to hitting a near-term peak on June 12.
Right now, the State Council, through the Peoples Banks, can print as much money as it likes to hold the line and push up stock prices, and set the value of the yuan against the dollar and other currencies as it likes. The market boom prompted millions of novice investors to pile into the market.
How will the Hong Kong property market react to a cataclysmic moment in the region’s recent economic history? Stocks in Southeast Asia were lower. China’s Shanghai Composite was down 1.2 percent at 4,022.91.
Asian stocks had already started the week on a dour note, rattled by a last week’s report on Chinese manufacturing that sparked a sell-off in gold as well as copper and other commodities. However, the market crash in the world’s second largest economy is unlikely to hurt global investors, observe some analysts. Fed leaders meet this week but few central bank watchers expect a rate hike. Expectations are split between September or December.
Selling shares on China’s super-volatile stock market isn’t just discouraged by the government: It might be illegal. The Federal Reserve Open Market Committee has a two-day policy meeting that ends Wednesday.
ENERGY: Benchmark U.S. crude was down 17 cents at $47.97 a barrel in electronic trading on the New York Mercantile Exchange.