Chinese stock markets halted for day after shares fall 7%

Investors fled to safe investments such as the U.S. dollar and yen, sending stocks and emerging-market currencies falling.

Japan's Nikkei 225 tumbled more than 3 percent while Hong Kong's Hang Seng retreated about 3 percent.

Chinese shares listed in Hong Kong, where there is no circuit breaker, extended losses after the halt on mainland exchanges.

But analysts said the "circuit breaker" risked interfering with market efficiency and could even prove counter-productive, heightening volatility instead of reducing it. The yield on three-year Treasurys lost 2.8 basis points to 1.605 percent, and the return on the benchmark five-year government bonds shed 3.6 basis points to 1.778 percent. It traded over $38 a barrel earlier in the day. "Having this so-called system in place is actually making the selling worse". The smaller Shenzhen Composite fell 8.2%.

Chinese stock trading was halted for this afternoon after the CSI 300 Index plunged more than 7 per cent.

USA stocks have finished the year in the same direction as January 72% of the time, according to Howard Silverblatt of S&P Dow Jones Indexes. That was a reaction to last year's volatile markets, which dropped more than 40% over the summer.

A big difference this time around is lower leverage, or the use of borrowed money to buy stocks. The slump was the latest episode in months of turmoil for Chinese investors.

He adds that China's weakness has affected other indices in Asia with most markets down about 2% this morning. Authorities have also clamped down aggressively on loans from China's unofficial shadow banks.

A private survey showed China's factory activity contracted for the 10th straight month in December, and at a sharper pace than in November. A figure under 50 indicates contraction.

The six-month ban, which was imposed at the height of China's share market crash in July past year, is due to be lifted at the end of this week.

The Australian share market has also closed lower on its first day trading day in 2016, in the wake of a weak lead from USA markets and profit-taking by investors.

"I didn't see that coming!" said Kit Juckes, a strategist at Societe Generale.

The S&G/ in Sydney ASX 200 list shut down 0.5PERCENT to 5 while the Kospi index of South Korea completed reduce by 2.2% to at least one, 918.76 factors. The offshore yuan was down as much as 0.97 per cent against the United States dollar.

In addition, about 9.27 billion lock-up shares in 34 companies, worth around 95 billion yuan, will become tradable this week.

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