Chinese markets were suspended Thursday for the second day this week after they fell more than seven percent, leading an Asia-wide sell-off as China weakened the value of the yuan currency by the most since August.
In a painful echo of the summer rout that wiped trillions of dollars off valuations, mainland investors ran to the sidelines on growing fears about the world's number two economy, a key driver of global growth.
The losses mark one of the worst starts to a trading year for decades as investors' nerves are shattered by a perfect storm of weak global growth -- particularly in China -- a slump in oil prices to more than 11-year lows and geopolitical tensions.
Regulators in China called an end to trade within just half an hour of the opening after the People's Bank of China (PBoC) weakened the value of its yuan currency by 0.51 percent against the dollar.
The drop was the biggest since August when the value was cut by five percent over a week -- a move that sparked weeks of turmoil across global markets over worries Beijing was did not have a handle on its economic crisis.
"It’s been hard to catch a breath in 2016 and traders haven’t really known which way to turn,” Chris Weston, chief market strategist in Melbourne at IG Ltd., told clients.
"For risk assets to stabilise and sentiment to turn around, we are going to need a stable or even positive move in the Chinese currency."
Trading was halted just before 10am (0200 GMT) as a "circuit breaker" kicked in after the benchmark Shanghai index slumped 7.32 percent and the Shenzhen composite index, which tracks stocks on China's second exchange, had tumbled 8.35 percent.
The stop -- activated when markets fall more than seven percent -- was triggered on its first day Monday.
It is based on the CSI 300 index, which tracks the largest 300 stocks on the two exchanges.
- Oil at 11-year low –
Authorities unveiled the circuit breaker as part of efforts to reduce volatility on China's volatile exchanges following the summer sell-off.
"The use of the circuit breaker is the main reason for the falls as investors panicked after seeing it being triggered on Monday," Phillip Securities’ analyst Chen Xingyu told AFP.
Mainland shares saw just mild losses Tuesday and a more than two percent gain Wednesday, buoyed by government injections of cash, which reports said was being used to buy key companies.
The concerns over China's economy -- which is growing at its slowest pace in a quarter century -- have been exacerbated by worries about the looming expiry Friday of a ban on selling ban by certain investors.
But reports have said regulators will delay lifting the measure, which was also brought in during the summer.
The carnage in China has seeped through to global markets this week and Asian trading floors continued to see red. Hong Kong slumped more than three percent and while Tokyo shed 1.8 by the break.
Sydney -- where several firms with trade links to China are listed -- lost 1.5 percent and Seoul was 1.1 percent off.
That followed another day of losses across US and European bourses.
Energy firms were among the worst hit after Brent oil prices fell six percent to its lowest finish since July 2004. The US benchmark West Texas Intermediate sank 5.6 percent to hit its weakest close since December 2008.
On Thursday in Asia both contracts fell another 1.6 percent each.
The losses came after the US Department of Energy said gasoline stockpiles jumped 10.6 million barrels and distillates, including diesel and heating fuel, rose by 6.3 million. The figures fed worries about a global supply glut and weak demand that has sent prices slumping more than 60 percent since mid-2014.
On currency markets, a rush to safe investments hit emerging currencies, while the dollar fell below 118.00 yen for the first time since August before edging up slightly.
- Key figures around 0300 GMT –
Shanghai - composite: DOWN 7.32 percent at 3,115.89
Hong Kong - Hang Seng: 3.1 percent at 20,338.13
Tokyo - Nikkei 225: DOWN 1.8 percent at 17,867.04 (break)
Euro/dollar: UP at $1.0183 from $1.0782 late Wednesday
Dollar/yen: DOWN at 118.01 yen from 118.49 yen
New York - Dow: DOWN 1.5 percent at 16,906.51 (close)
London - FTSE 100: DOWN 1.0 percent at 6,073.38 (close)