Asian markets tumble on China dip

Asian stock markets have dived lower after the biggest drop in Chinese stocks in a decade triggered a steep slide in global markets. Japan's TOPIX index dipped 3.88% while the country's Nikkei 225 stock index lost 3.56%.

The slips were echoed in Seoul, Sydney and Singapore but in Shanghai itself the index began recovery, rising 1.2%.

Wednesday's falls were sparked by a near-9% slide in Shanghai 24 hours earlier over fears on China's economy.

Fears of faltering

During Tuesday's trading, the Dow Jones fell more than 500 points at one point, before closing down 416.02 points, or 3.29%, at 12,216.24.

In London, the FTSE 100 closed on a fall of 2.3%, or 148.6 points, to 6,286.1.

Asian trading followed the trend of Wall Street overnight as the Dow Jones industrials shed more than 400 points with investors expressing fear that both US and Chinese economies are faltering.

Japan's Nikkei 225 index lost 3.56%, with shares falling 644.85 points in the morning session to 17,475.07 while Tokyo's broader TOPIX index dived 70.36 points or 3.88% to 1,740.97.

"Everyone is waiting to see when the selling will stop," Toshihiko Matsuno of SMBC Friend Securities, in Tokyo, told Reuters.

"Every once in a while you see this sort of panic selling in the market. Until it settles down the movement is drastic. That's what we are facing now," he said.

Tumble

In hectic trading in New Zealand early on Wednesday, shares fell by 3% in the biggest correction on the bourse since it dropped over 5% on 11 September 2001.

The tumble was matched in Australia whose benchmark SP/ASX 200 saw its biggest fall in six years, down 3.45% or 206.9 points to 5,786.9 within 30 minutes of markets opening.

In Hong Kong, Asian stocks listed on Wall Street slid 4.28%, their biggest one-day drop in nearly three years, as shares, led by Chinese stocks, fell across the board.

Singapore's Straits Times Index also opened lower - slipping 4.82%, down 155.89 points or 4.82 percent at 3,076.13.

Later, Malaysia's bourse marked one of the sharpest declines, losing some 8.17%, or 101 points in the first minutes of trading.

But the plunge in Chinese markets seemed to have slowed down by Wednesday morning, with Shanghai's Composite Index rising 1.2% to 2,804.28.

Chinese regulators also moved to repair damage by denying the rumours of a planned 20% capital gains tax on stock investments in part responsible for their plunge in value.

Tougher regulations

China has been one of the main emerging markets for many investors as the country's economy has grown strongly and the government has sold stakes in some of its biggest and most attractive companies.

However, the government has been looking at ways of slowing growth in order to stop the economy from overheating, and many investors are worried that it may lead to tougher regulations that will limit stock-market investment.

At the same time, there are concerns that interest rates will have to be raised in order to rein in economic and price growth, further denting domestic demand for shares.

Investor sentiment on Wall Street was also knocked by figures showing that US growth may be slowing down more than anticipated.