The China Securities Regulatory Commission (CSRC) has announced the suspension of the circuit breaker mechanism at the Shanghai Stock Exchange and the Shenzhen Stock Exchange on 8 January, according to a report by People’s Daily, China.
The move came after the second largest economy in the world allowed the biggest fall in the yuan in five months on Thursday.
Shanghai stocks were halted for the second time this week after another brutal sell-off.
The price of oil sank to its lowest level in 12 years as traders worried that a slump in China, the world’s second-largest economy, would mean lower global demand for energy.
US stocks opened sharply lower for a second straight day on Thursday as market volatility in China and a relentless slide in oil prices unnerved investors.
However, after the circuit breaker suspension was announced, European financial markets recovered some ground.
The pan-European FTSEurofirst 300 index moved up off its earlier session lows. The index had at one stage been down by 3.6 percent, but then recovered slightly to stand 2.5 percent lower by 1505 GMT.
German bonds – a haven in times of stress – sold off with yields on the 10-year, hitting a day’s high of 0.54 percent having earlier been at a one-month low of 0.48 percent.
Owen Callan, Senior Analyst at Cantor FitzgeraldThe scrapping of the circuit breaker has given a little bump to risk appetite. It had become a bit of a self-fulfilling prophecy and people had started to worry it was exacerbating the falls in Chinese stocks.
(With agency inputs.)
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