Chinese markets fall while other Asian shares climb; Investor confidence improves; Euro swings

Chinese shares slid Thursday as Beijing’s fresh measures to stabilize falling equity markets failed to restrain selling.

Other Asian shares were higher, however, as European markets recovered and investor confidence stabilized.

The Shanghai Composite fell 3.4%.

The smaller Shenzhen market was lower 4.2%.

The ChiNext board, composed of small-cap stocks, fell 2%.

Nearly three weeks of volatile trading has removed some gains from a yearlong rally. Thus, China's authorities have taken steps in recent days to underpin investor confidence, from pumping cash into the financial system to cutting interest rates.

However, even after recent declines, China’s main stock market has almost doubled in value over the past year.

On Wednesday, after sharp stock selloffs, the Shanghai and Shenzhen stock exchanges lowered fees on securities transactions by about a third. Both the Shanghai Composite and the Shenzhen Composite are now in the red territory, down more than 20% from recent highs.

CSRC

Also yesterday, the China Securities Regulatory Commission amended regulations governing stock purchases funded by borrowed money.

This move was directed to limiting the forced selling of shares as losses incur. Such selling has added pressure to an already battered market in recent weeks. Margin trading has stimulated much of the increase in China’s stock prices over the past year.

The CSRC cancelled rules that made brokers recall loans of customers whose leverage exceeds maximum levels, allowing them instead to negotiate rollovers of loans directly with clients, state media resource Xinhua reported.

ING analysts wrote in a research report that the CSRC move will bring forward the point at which enough leverage has been bled out of the system for the rally to resume.

Other Asia

On Thursday Asian stocks climbed in early trading after European markets stabilized a day earlier amid recovering investor confidence, although the atmosphere around Greece is still quite nervous.

Japan’s Nikkei 225 Stock Average climbed 1.2%.

Australia’s S&P/ASX 200 index rose 0.8%.

South Korea’s Kospi Composite was higher 0.3%.

The Hang Seng Index was last up 0.2%. Hong Kong listings of Chinese companies, known as H-shares, dropped 1.5%.

EUR/USD was last at 1.1065 higher 0.10%.

USD/JPY was 0.20% higher to trade at 123.43.

The greenback was supported overnight after the release of upbeat U.S. jobs and manufacturing data.