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World markets lose ground amid 'Black Monday' for Shanghai index

China's state media called it "Black Monday" as the stock market recorded its biggest slump in eight years and jitters spread across Asia and the rest of the world.

The collapse in Chinese stocks was fueled by mounting concerns about an economic slowdown here, but has fed into a wider sell-off in emerging markets. Asian shares hit a three-year low Monday, and the nervousness was likely to spread to Wall Street after last week's sharp falls there.

"A lot of questions are being asked by investors," said Chris Weston, chief markets strategist at IG in Melbourne. "This is a confidence game and when you don't have confidence, you press the sell button."

Shanghai's main share index closed down 8.49 percent, but trading in hundreds of shares was suspended after they lost 10 percent.

The Composite Index has fallen by nearly 40 percent since June, after rising more than 140 percent last year. Tokyo's Nikkei-225 index recorded its biggest fall in more than two years, falling 4.6 percent to a six-month low, while the MSCI index of Asia-Pacific shares outside Japan sank 5.1 percent to a three-year low.

Overnight futures trading suggested further losses were in store for the S&P 500 index in the United States after last week's six percent decline.

"Markets are panicking," Takako Masai, head of research at Shinsei Bank in Tokyo told the Reuters news agency. "Things are starting to look like the Asian financial crisis in the late 1990s. Speculators are selling assets that seem the most vulnerable."

Over the weekend, China announced it would allow pension funds to buy shares for the first time, but the move failed to restore confidence. State news agency Xinhua tweeted that it was "Black Monday!" as China's shares joined the global panic.

Some traders said the authorities' failure to step in to buy shares Friday -- when the market fell 4.2 percent -- generated a sense of panic and forced some funds to liquidate positions. Although pension funds have reported net assets of some $550 billion, experts said they might not want to buy aggressively in a falling market.

[Source: By Simon Denyer, The Washington Post, Beijing, 24Aug15]

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