Amazon shares plunged 13% as profit disappoints

Amazon.com Inc reported most profitable quarter in its history, but disappointed Wall Street, as missed analysts’s expectations for both revenue and earnings per share. The four-quarter report was posted on Thursday and as a result shares slumped 7% in Friday after-hour trading, putting them at 13% loss.

The results, as well as the company's determination to invest more in new areas and its extremely low profit margins, brought back perennial questions for investors about the company's ability to consistently earn money.

"By comparative retail standards, Amazon's level of profitability is still painfully weak," said Neil Saunders, head of retail analyst firm Conlumino, who is still positive on Amazon's prospects. "For every dollar the company takes, it makes just 0.75 of a cent in profit."

Amazon's net profit for the fourth quarter, which includes the holiday shopping season, rose to $482 million, or $1.00 per share, in the quarter ended Dec. 31, up from $214 million, or 45 cents per share, a year earlier.

That figure was held back by rising operating costs. It was well below analysts' average forecast of $1.56 per share, according to Thomson Reuters I/B/E/S.

Amazon notched its third consecutive profitable quarter for the first time since 2012, but it still left Wall Street wanting more.

Net sales rose 21.8 percent to $35.75 billion, but missed analysts' expectations of $35.93 billion.

Excluding a $1.2 billion unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter, net sales increased 26 percent compared with the fourth quarter of 2014.

Amazon Chief Financial Officer Brian Olsavsky defended the company's results on Thursday, adding that foreign exchange rates had an unexpectedly large impact, but overall the company had "a very strong quarter and a strong year."

Net sales from its cloud services business, Amazon Web Services, rose 69.4 percent to $2.41 billion, compared with a growth of more than 78 percent in the third quarter. AWS continues to be the fastest growing division within Amazon.

The company's total operating expenses rose more than 20 percent to $34.64 billion in the fourth quarter.

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POBC injected another 340 million yuan into the country's financial system

People's Bank of China flowed into the financial system of the country another 340 billion yuan (47 billion EUR), continuing their large-scale intervention in response to the heightened need for liquidity.

Policy makers are trying to keep borrowing costs from rising as they contendwith the slowest economic growth in a quarter century and record capitaloutflows that drove the yuan to a five-year low this month. Short-term lendingtools are being used in preference to a more permanent loosening of monetarypolicy as the PBOC seeks to avoid exacerbating an exodus of funds that’s led tocostly intervention in support of the exchange rate. Yuan purchases drove arecord $108 billion slide in the nation’s foreign-exchange reserves in Decemberalone.“The huge amount ofopen-market injections are targeting the pre-holiday cash demand,” said LiuChangjiang, a bond analyst at Soochow Securities Co. in Shanghai. “As thecentral bank has become less willing to cut reserve-requirement ratios, suchshort-term funds are only keeping the money market tightly balanced.”

The benchmark seven-day repurchase rate, a gauge of interbank liquidity, was little changed at 2.31 percent Thursday, a weighted average from the National Interbank Funding Center shows. The one-month Shanghai Interbank Offered Rate climbed for a sixth day, rising four basis points to 3.13 percent, the highest level since July.

The central bank will conduct open-market operations every work day from Jan. 29 through Feb. 19, according to a statement posted on its website Thursday afternoon. Government offices will be closed Feb. 7-13 for the Lunar New Year holidays. The central bank also said it will allow seven more lenders to participate in its Short-term Liquidity Operations.

Demand for cash surges in the run-up to the break as people stockpile funds to pay for trips, feasts and gifts. Huachuang Securities Co. estimates the sum involved is close to 2 trillion yuan. Quarterly tax payments will syphon off some 300 billion yuan in addition to the average monthly drain of about 700 billion yuan stemming from capital outflows, the brokerage said.
The central bank added a net 1.8 trillion yuan into the financial system this month, including 1.135 trillion yuan via open-market operations and 612.5billion yuan via its Medium-term Lending Facility, data compiled by Bloomberg show. The PBOC plans to arrange 1.6 trillion yuan of short-term funds and as much as 800 billion yuan of medium-term liquidity support, according to the transcript of a PBOC meeting posted on Sina.com Friday.

Xiaomi revenue from Internet services increased by 150% in 2015

Chinese smartphone maker Xiaomi Inc. more than doubled its revenue from Internet services in 2015 to $ 564 million.

The founder and CEO of Xiaomi Inc., Lei Jun has set target revenue of $ 1 billion last year that failed to perform. Similar to companies like Apple, Xiaomi is trying to respond to the slowdown of the smartphone market by offering different internet services in order to gain more revenue.

Revenue from such services, including games and applications for mobile payments, have increased by 150% to 3.71 billion yuan ($ 563.94 million) from 1.48 billion yuan a year earlier.

As part of the internet business services, Xiaomi posted revenue of mobile games in the amount of 2.6 billion yuan for 2015, which is more than double according to the reported 1.21 billion yuan a year earlier.There has been a talk of a Xiaomi Inc. IPO in 2015, but it didn’t happen. This fast-growing tech company will not be ignored for a long time. Xiaomi launched in 2011 and today is the third largest smartphone maker in the world. Xiaomi draws attention of customers because of the low prices and attractive selling strategy. Xiaomi attracts and media because it’s said that copies Apple. Main sales are within China, but Lei Jun’s eyes are now looking to the rest of the world. The fact is that Xiaomi’s products are gaining popularity worldwide.

Assuming all above I think that Xiaomi will be an interesting to watch IPO candidate in 2016.

Chinese stocks plunged to 13-month low

Chinese stocks tumbled to the lowest levels in 13 months, dragging down other Asian markets as investors reacted negatively to the renewed decline in oil prices back below $ 30 a barrel.

Shanghai Composite Index closed today’s session with a decline of 6.4% to the level of 2751 points as this is its first close below the psychological level of 2800 points since December 2014 onwards. This represents a decline of  47% of its peaks reached in June 2015-a year. 

ChiNext benchmark closed with a loss of 7.78% and Shenzhen Composite dropped by 7.12%.

Investors remain concerned about the capital outflows fueled by the weaker yuan. Sentiment is quite negative before the upcoming week holiday for the celebration of the Lunar New Year, starting on 7 February.
This provoked a decline in the other Asian markets. Nikkei fell by 2.35%, Hang Seng - by 2.48% and Kospi - by 1.15%.

Eurozone business activity growth fell to 11-month low

Eurozone private sector business activity slowed its growth to 11-month low in January, as the deterioration of the situation was observed both in manufacturing and services.

The Composite Purchasing Managers Index (PMI), that is closely watched by Markit, decreased from 54.3 to 53.5 points, disappointing analysts who had predicted a slight decrease to 54.2.

The indicator for manufacturing sector retreated from 53.2 to 52.3 points in expected 53 points. PMI for the services sector  fell to 53.6 points from 54.2 in December, while the forecast was for zero change. In the manufacturing sector the performance is the weakest for the last three months, and non-productive - in a year.

Markit chief economist Chris Williamson said "the cooling of business activity at the start of 2016 is a disappointment but not surprising given the uncertainty caused by the financial market volatility seen so far this year.""It would be wrong to get too worried," Williamson said, saying the report was consistent with overall quarterly growth of 0.3-0.4 percent.

Russian Ruble hit a new fresh record low

The continued pressure on oil markets deepened in today's trading the free fall of the Russian ruble to new record lows.

Around noon the Russian currency tumbled to a historic low of 85.9493 rubles for one US dollar,  after  yesterday broke easily the psychological level of 80 rubles and former record low around 80.10, which was achieved during the last major financial crisis in Russia in December 2014. Thus the Russian ruble depreciated by almost 15% only within the first days of this year.

Meanwhile, the euro rose for a short to 93.70 rubles approaching its historical peak of late 2014 around the level of 98 rubles.

The renewed sharp depreciation of the Russian ruble in the recent days is mostly due to the massive drop in oil prices by over 25% from the beginning of the current year to the lowest levels of 2003 and onwards.

A negative impact have also the indications by the Russian central bank earlier this week that it has no immediate plans to stabilize the local currency by conducting foreign exchange interventions since the collapse of the ruble was acquitted and does not threaten the financial stability.

EUR/USD pinned to $1.09

As is it was expected the European Central Bank monetary policy remained unchanged and markets didn’t react on this news.  

The European Central Bank made no changes to monetary policy and kept the deposit rate at -0.3% and the main refinancing rate at 0.05%.

The euro was not very volatile after the decision, as expected, and the EUR/USD pair was spotted directionless around $1.09.

The focus of investors will now shift to Mario Draghi's presser, which starts shortly. This press conference might bring some bigger movement for the EUR/USD pair.

Considering the latest surge in the euro since the last meeting in December, Draghi is expected to sound dovish and talk the euro down. If the presser brings a neutral tone, the EUR/USD pair might very well breach the $1.1040 resistance and continue higher, which would be negative for the ECB. Therefore, risks are on the downside for the euro, heading into the presser.

From the US dollar point of view, jobless claims are due later in the day, along with the Philly Fed Manufacturing Index for January, which should improve from -5.9 to -5.0.

Some volatility might come after Friday's existing home sales for December, which are projected to increase rapidly to 5.20 million, from 4.76 million previously. This would represent a 9.2% monthly gain.

The pair continues to consolidate around the $1.09 mark and while it remains stuck between $1.08 and $1.1040, the trend is neutral, and choppy trading is expected to prevail in the coming days.

New record: 85.6 rubles per euro

The Russian currency dropped to a new historic record in devaluation at the beginning of the week. Tuesday the central bank in Moscow determined the official rate of the ruble against the euro at 85, 622 rubles.

Forex trading in Kremlin does not remember such an event. The ruble was most expensive on 18 December 2014 when the rate was 84,622 rubles per euro. But this level is already in the history.

Even before trading ended in the foreign exchange segment on the Moscow market, tomorrow's exchange rate had already been exceeded, because there were deals for 86.26 euros.

The dollar also shoot up. The exchange rate of the US currency for tomorrow is 78.67 rubles.

The freely falling of Russian money is because of the continuing sinking oil price once dropped sanctions on Iran. Therefore, foreign exchange dealers in Moscow in the coming days expect the dollar to break through the psychological level of 80 rubles.

And the forecast for the price of "black gold" is not good at all.

Oil prices tumbled to a 13-year low

Oil prices reached a 13-year low on Monday amid the lifting of sanctions against Iran, which is a member of OPEC. On Sunday, Iran announced that the country is ready to increase its exports by 500,000 barrels per day.

Responding to Tehran's compliance with a nuclear deal, the United States and major powers revoked international sanctions that had cut Iran's oil exports by about 2 million barrels per day (bpd) since their pre-sanctions 2011 peak to little more than 1 million bpd.

Iran, a member of the Organization of the Petroleum Exporting Countries (OPEC), issued an order on Monday to increase production by 500,000 bpd, the country's deputy oil minister said.

Worries about Iran's return to an already oversupplied oil market drove down Brent crude LCOc1 to $27.67 a barrel early on Monday, its lowest since 2003. The benchmark was down 29 cents at $28.64 by 1850 GMT (1350 ET).

U.S. crude CLc1 was down 48 cents at $28.94 a barrel, not far from a 2003 low of $28.36 hit earlier in the session. Trading volumes were thin with U.S. markets closed for the Martin Luther King Day holiday.

"You can't say this was unexpected but the Iran news is an additional factor that's working against oil prices," said TD Securities analyst Bart Melek, who also pointed to global oversupply and concerns about demand from China.

He said oil could fall further if Chinese economic data released overnight, including GDP and retail sales data, points to more weakness in the economy.

"If we get nasty economic numbers from China there's potential for another swoosh lower," Melek said.

Analysts expect Iran will realistically be able to export an extra 500,000 bpd in the short term from storage, but there are doubts whether the state of Iran's oil infrastructure will allow further boosts anytime soon.

SEB Markets assumes Iranian oil output will rise by 400,000 bpd to 3.2 million bpd in 2016, while Tehran has said it will add 1 million bpd to its existing output by the year-end.

Iran has at least a dozen Very Large Crude Carrier super-tankers filled and in place to sell into the market.

Ina sign of the pain low prices are inflicting on oil producers, OPEC forecastthat supply outside the organization would decline by 660,000 bpd in 2016, ledby the United States. Last month OPEC predicted a drop of 380,000 bpd.

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FCA shares fell by 10%

Today the shares of Fiat Chrysler Automobiles (FCA) dropped by 10% on the stock exchange in Milan, after it became clear that the company had falsified sales date in U.S. sales

Website Automotive News said the two Chicago dealerships allege FCA offered money to dealers to report unsold vehicles as sold.

It said that the federal suit alleges, among other claims, that FCA conspired with certain dealers to inflate the automaker's monthly U.S. sales reports.

FCA shares had fallen 9.8 percent to 6.6950 euros by 1204 GMT after being suspended from trading twice for excessive volatility.

The European car sector index was down 6 percent, after also being hit on Thursday by news that police had searched the offices of Renault last week in an unrelated investigation.

"Investors are nervous on auto stocks," Italian broker Mediobanca Securities said in a note. "For those reasons share price reaction is difficult to estimate and probably irrational."

Automotive News quoted a spokesman for FCA in the United States as saying the carmaker had not been served with the lawsuit so he could not comment.

A spokesman for FCA in Italy contacted by Reuters declined to comment.

Automotive News said that the lawsuit alleges that dealers were paid to report false sales on the last day of the sales month and then reverse the sales the following business day "before the factory warranty on the vehicles could be processed and start to run".

The suit, filed by two dealerships in the Napleton Automotive Group, alleges that FCA officials were aware of the false reporting of sales and rewarded local managers for hitting sales targets, the report said.

The lawsuit also alleges that FCA benefited from the practice "as it results in the inflation of the number of year-on-year sales which, in turn, create the appearance that FCA's performance is better than, in reality, it actually is".

An analyst who spoke on condition of anonymity said FCA's Investor Relations office had told him that the allegations were unrealistic and that FCA calculates its revenue on shipments, not sales.

The analyst said that the FCA emphasized it is not the Chrysler U.S. dealers’ association that made the accusations, "but only a couple of dealers".

Separately, shares in French carmaker Renault tumbled more than 20 percent after a union official said the firm's offices had been searched last week in an investigation possibly linked to emissions.

The news follows nearly four months ofheadlines over a scandal involving rival Volkswagen (VOWG_p.DE), which admittedcheating on U.S. emissions tests. Shares in VW are down about a fifth since.

China trade surplus expands in December as exports rise

Chinese exports grew in December for the first time in six months.Thus, the trade surplus exceeded 382 billion yuan. Meanwhile imports declined for the fourteenth-consecutive month and this also helped the trade surplus to expand.

Chinese trade figures for December came in much better than anticipated, with exports unexpectedly rising and imports falling less than forecast.

The trade surplus expanded from 343.10 billion yuan in November to 382.05 billion yuan in December, according to the Customs General Administration of China (CGAC), while analysts expected the surplus to contract to 338.80 billion yuan.

Exports rose 2.3% year-on-year last month, doing much better than the 4.1% decline forecast by markets. Imports were down 4% over the same period, almost half the decline anticipated, but are now on a 14-month losing streak.

In dollar terms, the trade balance stood at $60.09 billion in the reported month, beating analysts' predictions of $51.30 billion. Both exports and imports tightened their declines in December, coming in at 1.4% and 7.6%, respectively.

Still,the first rise in exports since June means China's export-dependant economylikely faced its weakest expansion in 25 years last year. 

EUR/USD

Last week was good for the currency market. GBP/USD is close to an important level. 

Will we see a rise in EUR/USD despite the forecasts of most analysts?

I rather have neutral expectations in this currency pair due to the lack of a clear trend.

On Friday it became clear that in December the US economy added 292,000 new jobs. Expectations were that it would be added 203 000. This of course is good news for the dollar because better data generally lead to appreciation of the currency of the country. But instead of the dollar to rise and the currency pair to make lower lows we saw just the opposite. Finally the week ended in favor of the euro. 

On Friday, when the news came out, it became clear that the bears did not have enough strength to hold the price in the low levels around 1.0800. Instead, we saw closing above the middle Bollinger.

When a news does not lead to the expected effect and instead we see on the chart opposite movement, that gives us an early indication of change of direction.

So for me it was more likely to see a rise this week.

But today the greenback is stronger against the euro, prolonging its two-day leap as investors assessed the risk-off mood oscillation amid the latest moves of the People's Bank of China along with speeches of several central bankers.

Therefore, the EUR/USD pair declined over one hundred pips from the two-week high at $1.0969 reached during the European market hours on January 11, as the buck received technical aid from the resistance at $1.10, which was only temporarily breached once since the beginning of November.

In the afternoon, the EUR/USD fell 0.20% to trade at $1.0836, sliding from its intraday high at $1.0900, while the buck slightly advanced against major peers with the US dollar index rising 0.28% to99.18 points.

Light data session

Traders experienced a relatively calm morning in Europe, as the major release came from the UK, thus influencing mainly the cable. Nevertheless, the sluggish manufacturing and industrial updates cast additional clouds in London and raised questions about the timing of a rate hike by the Bank of England (BoE). 

Later today, the Bureau of Labor Statistics published the monthly update of JOLTS job openings, which hit 5.43 million in December, marginally missing the market survey of 5.45 million, but still rising from the 5.38 million seen in November.

Looking ahead, traders will keep an eye on the upcoming Chinese trade balance figures for December later on Tuesday, as the surplus is expected to shrink to $51.3 billion, after $54.1 billion booked a month ago.

The schedule in the US will start to attract more attention in the second half of the week, starting with initial jobless claims due on Thursday and the highlight will come on Friday when the US Census Bureau is set to post a muted retail sales report for December, expected to show a 0.1% drop month-to-month.

As for upcoming European news, industrial production for the whole euro block is forecast to hit only 1.3% year-to-year in November, slowing from the pace of 1.9% booked previously. The release is scheduled for Wednesday morning,while the German Federal Statistical Office will unveil the GDP annual growth rate on Thursday, with the anticipation of a 1.7% hike.

AUD/USD remained under $ 0.70

The aussie found some volatility today, mainly due to US data, while the risk appetite returned and higher yielding currencies were trading a bit higher against the yen and the US dollar.

 AUD   lost some intraday gains against the US dollar during the New York session on Monday after the US Labor Market Conditions Index release, while earlier in the day the aussie had fallen to four-month lows, as the buck was backed by the NFP released on Friday.

The AUD/USD cross was trading 0.45% higher at $0.6979 during the New York session, after hitting a daily high of $0.7036 on Monday. The pair rose from a low of $0.6927 hit during the Asian session, a level last seen in September 2015.

Friday's US labor market data provided some support for the greenback, as the pair dropped to new intraday lows after the release, although the reaction was not very volatile.

Employers hired an additional 292,000 workers in December, blasting past the 200,000 increase markets had been anticipating, figures from the Department of Labor showed on Friday. 

he week ahead is relatively quiet until the latter half, with no new data out of Australia until Thursday when the closely watched employment change and unemployment rate will be released.

Markets expect that the Australian jobs data for December will show the labor market shed 12.5K jobs, after November's report saw a massive 71.4K hike. As always, eyes will also be on China and January's Chinese trade data.

"While today's job advertisements data is actually only a third tier release, I have included it here as we have Australian employment data to be released on Thursday. As we head toward the end of the week, traders will be looking for clues in today's number on which way to best position themselves," Dane Williams, a Vantage FX Market Analyst, said on Monday.

The Australia and New Zealand Banking Group's (ANZ) job advertisements in December plunged -0.1% from a downwardly revised 1.1% gain recorded in the previous month, data showed on Monday. The ANZ job advertisement series measures the number of jobs advertised in the major daily newspapers and internet sites covering the capital cities.

"Of course, should activity in China weaken further and equity prices in Australia continue to fall, then GDP growth may even slow this year rather than hold steady close to 2.3% as we expect and the RBA could start cutting interest rates again sooner (our forecast is that rates will fall from 2.0% now to 1.5% this year). But, for the moment, the equity price falls seen so far this year are not big enough to significantly alter the economic outlook or prompt the RBA into action," Paul Dales, chief Australia and NZ economist, said.

AUD/USD hit 3-month bottom

The Australian dollar is again trading in red territory today, hitting a three-month low against USD, as the greenback found support after the crucial NFP release.

The AUD/USD returned to losses on Friday, paring all the previous gains and trading below the $0.70 handle.

The aussie was down 0.42% at $0.6982 against the greenback, after hitting an intraday low of $0.6966 - a level last seen in September.

The bullish sentiment towards the US dollar took center stage after strong American employment figures, which in return weakened the aussie.

American employers hired an additional 292,000 workers in December, blasting past the 200,000 increase markets had been anticipating, while the unemployment rate held at the post-recession low of 5% for a third month in a row.

Economists praised Friday’s job figures. "Wow, what a report. The consistent strength in job growth makes up for the apparent weakness in other economic data. It is the main reason the Federal Reserve has begun tightening policy and will continue to nudge rates up over the course of this year," James Marple, senior economist at TD Economics, said in a note.

"As long as job growth remains above trend, its bias will be toward tightening, albeit very gradually unless inflation rears its head," Marple added.

Also, markets digested Australian retail sales for November, which declined from an upwardly revised 0.6% to 0.4% month-on-month. Meanwhile in the previous session, the Australian trade deficit narrowed from 3.247 million AUD to 2.906 million AUD. Also, Australian building approvals plummeted from 3.3%to -12.7% month-on-month, with the yearly print also deteriorating sharply from12.6% to -8.4%.

European stocks tumble

All European indices fell sharply on Thursday as most declined more than 2%.

The German leading index Dax lost shortly after the start of the session 2.9% and fell below 10,000 points to 9913 points. This happens for the first time since mid-October.

The biggest losers in Dax group are shares of export-oriented automakers. 

BMW recorded a decline of 4.3%. Shares of Volkswagen and Daimler fell with 3.9%. Merck shares reported a decline of 1.2%, Henkel dropped with 1.4%, while K + S lost 1.4% of its value.

MDax fell with  2.3% to 19,524 points. TecDax lost 2.8% of its value and reached 1737 points. Euro-Stoxx-50 decreased by 2.5% to 3063 points.

In Paris CAC 40 fell by 2.57% and reached 4365.23 points, while London's FTSE 100 tumbled 2.36% to 5930.06 points.

Oil price fell to a new 11-year low

Oil prices fell to new lows after at the beginning of the week recorded a slight increase. Brent crude is trading below $35a barrel, its lowest value in 11 years.

Brent crude sank by 4.2% to $34.88 a barrel, surpassing its late December fall, and taking the price to its lowest level since 1 July 2004. The price of US crude dropped 3.3% to $34.77 a barrel.

The sharp falls followed a short-lived rally on Monday after Saudi Arabia broke diplomatic ties with Iran.

Analysts said fears over the worsening relations between Saudi Arabia and Iran, which had initially raised concerns about possible supply disruptions and boosted the oil price, had now been overtaken by pessimism over oil cartel Opec ever agreeing on a production ceiling.

How low?

Historically, Opec has cut production to support prices. But led by Saudi Arabia, by far the group's most powerful member, the group has resolutely refused to trim supply this time.

Rising tensions over Saudi Arabia's execution of Shia cleric Sheikh Nimr al-Nimr mean that any agreement is now deemed less likely than ever.

"With relations between Opec kingpins Saudi Arabia and Iran at a historic low point, it solidifies an already unlikely scenario that Opec might cut output," said Barclays analyst Alia Moubayed.

Since mid-2014, oil prices have slumped 70% mainly because of oversupply. This in turn is largely due to US shale oil flooding the market.

At the same time, demand has fallen because of a slowdown in economic growth in China and Europe.

Iranian oil exports are also expected to rise later this year once Western sanctions against Tehran for its nuclear programme are lifted, increasing the oversupply of oil.

Opec is hoping that refusing to cut production will help to drive US shale producers out of business, believing that they will fall victim to lower prices long before its own members, and has forecast that prices will recover to $70 a barrel by 2020.

Goldman Sachs has warned that oil prices could go as low a $20 a barrel, but most analysts are expecting the price to stabilise inthe second half of the year as supply from non-Opec nations slows and demand remains relatively robust.

China may restrict stock sales to stem falls

The decline in the Chinese shares continued today after Monday trade was halted because of a collapse of 5% of the stock exchanges. The benchmark Shanghai Composte lost 1.5% to 3,246.61 points, while the Hang Seng ended the day with 0.8 percent down to 21,168.81 points. Monday's suspension of trading led to a global equities sell-off, but today Chinese shares extended losses in a volatile session.

The Shanghai Composite fell 0.3% to close at 3,287.71 points, although it had opened more than 3% lower.

Hong Kong's Hang Seng index also fluctuated through the day, and ended 0.7% lower at 21,188.72.

Trading in Shanghai was suspended early on Monday under a new rule designed to limit dramatic falls in markets.

But regulators said on Tuesday they may restrict stock sales to stem falls.

The China Securities Regulatory Commission said it would consider restricting the proportion of shares that major shareholders could sell during a given period of time.

The central bank also injected an unexpected 130bn yuan (£13.55bn; $19.94bn) into the market to keep borrowing costs down - in a move to reassure retail investors.

The measures, however, did little to prevent Chinese shares from falling in afternoon trade.

More volatility ahead?

Analysts said investors were waiting to see if Beijing could stem the latest selling in Chinese stocks and whether more measures would be introduced.

But Bernard Aw, market strategist at trading firm IG, said Beijing was arguably more concerned about economic growth than the stock market.

"Furthermore, it could look really bad if they have to throw in more measures when they are in the process of withdrawing the [last] rescue measures," he said in a note.

The new "circuit breaker" rule that suspended trading nationwide for the first time on Monday was created after sharp falls last summer and was meant to curb market volatility in China.

Monday's 7% fall in China spooked global markets. 

Overnight, US benchmark indexes lost up to 2% as concerns grew that the dive in the Chinese stocks was the start of another volatile period after last summer's dramatic market rout.

Oil continues to weigh

Escalating tensions in the Middle East, which affected oil prices, also dented investors' confidence.

Oil prices were flat after rising as much as 4% on Monday following the dispute between Saudi Arabia and Iran. 

Japan's Nikkei 225 index ended 0.4% lower at 18,374.00, while Australia's S&P/ASX 200 closed down 1.6% at 5,184.43.

Only South Korean shares bucked the downward trend after a senior finance ministry official said the government would take action to stabilise the market if needed, following Monday's steep plunge.

The Kospi finished up 0.6% at 1,930.53.