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Shanghai - A fresh round of volatility shook Asian and European stocks on Wednesday as further evidence of slowing growth in China's economy cast a cloud over global markets.
Following hefty early losses, some Asian bourses reversed direction to close in positive territory - the latest session of roller-coaster trade as concerns over the worldwide outlook keep investors on edge.
In early European trading London, Paris and Frankfurt tried to stage a rebound from a painful sell-off Tuesday, only to turn lose the gains by late morning.
The Australian dollar - heavily linked to demand for the country's abundant natural resources - plumbed six-year lows as figures showed the economy logged a slower-than-expected 0.2% quarterly expansion.
That came after Canada officially entered recession, hit hard by stubbornly low oil prices.
Both countries' economies are dependent on the exports of commodities - such as iron ore - that have powered Chinese growth over the past decade.
Adding to tensions are uncertainties about whether the US Federal Reserve will raise interest rates at a policy meeting this month.
"You have worries about the global growth outlook, led by Chinese concerns at a time when the Fed is thinking about raising interest rates, and that's leaving investors very twitchy," Shane Oliver, a global strategist at AMP Capital Investors in Sydney, told Bloomberg News.
"I think we've seen the worst, but it's an environment where volatility is likely to continue."
Tokyo saw some of the worst turbulence, opening sharply lower only to rally at mid-session and then close down 0.39%.
Shanghai plunged 4.39% at the beginning of the day, jumped into positivity by lunch but ended 0.20% lower. Analysts said the heavy losses were largely erased thanks to government support ahead of a two-day World War II remembrance holiday.
On Tuesday, official data showed Chinese factory activity contracted in August, the latest sign that growth in China - which accounts for more than 13% of global GDP - is slowing.
While the Shanghai market is somewhat decoupled from the real economy - many analysts and players acknowledge it is akin to gambling - wild swings there are seen as worrying signs of Beijing's inability to manage structural change.
Commentators say China's high government-spending model of the past three decades is unsustainable, and must transition into consumer spending.
Washington, whose own recovery from the global financial crisis is still far from entrenched, will this week urge China to better communicate its policies when representatives from the Group of 20 meet in Turkey.
Treasury Secretary Jacob Lew "will emphasise that, fundamentally, the world needs more demand", said a US official, who spoke on condition of anonymity.
Wu Kan, a Shanghai-based fund manager at JK Life Insurance, said Beijing appeared to have been buying blue-chip stocks in recent days in an effort to support the market.
"But investors have lost confidence amid the ongoing de-leveraging and the overnight global rout," he said. "The correction isn't over yet."
The state-owned China Securities Journal reported on Wednesday securities firms were transferring more funds to a government-supported fund to help stabilise the market.
Analysts estimate the government has spent hundreds of billions of dollars to prop up stock prices.
The jitters in China were reflected across most of the region. Hong Kong swung in and out of positive territory throughout the day to end with a loss of 1.18%. Seoul ended 0.05% higher after starting in the red.
In Sydney, where several companies with close ties to China are listed, the main index spent most of the session in the red before a late rally pushed it just 0.1% higher.
Europe's three main markets all pushed higher at the opening bell, but then swung lower. London was down 0.20%, Paris shed 0.23% and Frankfurt was off 0.07%.
Despite the turbulence International Monetary Fund chief Christine Lagarde on Wednesday said Asian economies were doing "pretty well".
Speaking in Jakarta, she said the recent turmoil highlighted the "extraordinary gains" made by Asian economies but warned further volatility was on the horizon.
"Now the situation is changing yet again, and we are all feeling the impact of China's rebalancing and moving to a revised business model," she told a conference.
Oil extended its sell-off to a second day. US benchmark West Texas Intermediate for October delivery fell 2.09% to $44.46 while Brent slipped 1.37%, to $48.88, in morning European trading.
The euro slid to $1.1279 from $1.1313 late on Tuesday in New York on building optimism over the health of the US economy.
