Shanghai and other Asia-Pacific sharemarkets continued their volatility yesterday as worries surfaced again about China's slowing economy.
In Australia, the sharemarket was hit by the slowdown in China but also disappointing Australian economic growth figures.
''Poor economic data and weak investor confidence are together pushing down the market now,'' Zheshang Securities analyst Zhang Yanbing told Reuters''The market is on a downward trend and it can't be stopped now.''
The Chinese Government said on Tuesday its purchasing managers' index (PMI) of manufacturing activity came in at 49.7 last month, its lowest for three years.
Global stock markets plunged on the evidence of the slowdown in China's economy - the world's second largest - which triggered sell-offs in US and European markets.
Trading on China's stock markets has been extremely volatile for the past two months, after a 150% rally over the previous year collapsed from its peak in mid-June.
The Government launched a rescue package to prop up the market, which includes funding a state-backed company to buy shares, but investors worry the Government will reduce its intervention.
Chinese financial markets will be closed today and tomorrow for a holiday to commemorate the 70th anniversary of victory over Japan and the end of World War 2. Trading will resume on Monday.
Craigs Investment Partners broker Chris Timms said Beijing-backed funds had been buying shares in recent sessions, cushioning the losses. European shares slid in value, coming under pressure after disappointing factory activity in both China and parts of the euro zone.
August ended as the worst month for shares in years, he said.
In the United States, both the Dow and the Standard and Poor's indices had five days of gains or losses of more than 2% in August, making it the most volatile month in nearly four years.
The major averages ended last week with gains for the week and historic intra-week reversals. However, they posted August losses of more than 6% each, their worst month in at least three years.
Asian stock markets closed their worst monthly performance in more than three years in August as shares struggled to recover from a global sell-off.
European shares ended lower, registering their worst monthly performances since Europe's debt crisis four years ago, Mr Timms said.
The Stoxx Europe 600 fell 0.5% on August 31, leaving Europe's benchmark index with a monthly fall of about 8.5%, its largest tumble since August 2011 when the index fell nearly 10.5%, according to FactSet data.
Recent volatility in global financial markets showed how rapidly risks could spill over from one economy to the next, the managing director of the International Monetary Fund (IMF) Christine Lagarde said in Jakarta yesterday.
''What has been demonstrated in the last few weeks is how much Asia is at the core of the global economy, and how much disruption in one market in Asia can actually spill over to the rest of the world.''
Ms Lagarde said the world economy was facing headwinds from China's rebalancing, Japan's slow growth, falling commodity prices and uncertainties surrounding higher US interest rates.
Policies need to be tailored to each country, but mostly they would involve strengthening defences with prudent fiscal policy, reining in excessive credit growth, aligning exchange rates to act as shock absorbers, and maintaining adequate foreign exchange reserves.
