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[HONG KONG] Chinese stocks sank again on Monday amid uncertainty over US interest rates, reviving fears of a broader global economic slowdown that has rocked the world's financial markets.
Analysts warned of further gyrations following a rollercoaster ride last week, with investors shifting into safe-haven assets such as the yen and gold, while oil sagged.
In a bid to settle investors' nerves, Beijing on Monday paraded a financial journalist "confessing" to causing "great losses" during recent market turbulence.
State broadcaster CCTV showed Wang Xiaolu, a journalist with the respected business magazine Caijing, saying he had sought to create a stir and catch the eyes of readers with his articles.
The ministry of public security also said at the weekend that 197 people had been punished for "spreading online rumours" on several issues, including the markets and giant deadly blasts in the port of Tianjin, but gave scant details.
But while initial stock market falls Monday of more than three percent were pared, Shanghai closed down 0.82 per cent at 3,205.99.
The index plunged more than 16 per cent from Monday to Wednesday before bouncing back by 10 per cent in the next two sessions.
The rebound came after Beijing cut the cost of borrowing - its fifth interest rate reduction since November - to try to pump up the economy, which is a key driver of global growth.
The swings in China - which has seen Shanghai lose about 40 per cent since hitting a June 12 high - have fuelled concerns that Beijing is struggling to get a grip on its economic slowdown.
Analysts say China needs to rebalance its economy so that it relies more on consumer demand and less on lavish state spending.
A successful transition is seen as crucial for the worldwide economy.
On Friday credit rating agency Moody's slashed its 2016 growth forecast for G20 economies to 2.8 per cent from 3.1 per cent, predicting contractions in Brazil and Russia and lower demand for manufactured goods in South Korea and Japan due to problems in China.
Comments from US Federal Reserve vice chairman Stanley Fischer at the weekend - which left open the possibility of a September interest rate rise - have added to nervousness.
The historically low US interest rates of recent years have fuelled investment in global stock markets because they have made it cheap to borrow money for speculation.
A rise would likely tamp down that appetite.
In a speech at a conference on monetary policy in Jackson Hole, the Fed's number two said the bank would not wait for US inflation to hit two percent before tightening policy.
"The change in the circumstances which began with the Chinese devaluation is relatively new and we are still watching how it unfolds. So I wouldn't want to go ahead and decide right now," he later said in a CNBC interview.
Nader Naeimi, head of dynamic asset allocation at AMP Capital Investors in Sydney, told Bloomberg News: "We are going to continue to see volatility.
"The Fed is aware of the market volatility and you wouldn't have thought they would be raising rates into market turmoil.
"But at the same time, data coming out of the US has been surprisingly resilient and strong. It's very difficult for the Fed." Traders, fearing further losses, switched into safer investments. The dollar fell to 121.16 yen, from 121.52 yen in New York, while gold traded at US$1,132.45 against US$1,127.82 late Friday.
Both the precious metal and the Japanese currency are seen as safe bets in times of turmoil.
Oil prices turned lower after enjoying their best week in years.
The commodity has taken a hit from concerns about China, the world's largest energy user, as well as a global oversupply and a strong dollar.
US benchmark West Texas Intermediate for October eased 89 US cents to US$44.33 while Brent crude fell 1.23 US cents to US$48.82.
The two contracts rocketed 11 and 10 percent, respectively, last week.
Most bourses in Asia followed Shanghai's lead after enjoying healthy gains on Friday.
Tokyo stocks fell 1.28 per cent to close at 18,890.48, while Sydney closed 1.07 per cent lower at 5,207.0. Wellington fell 0.44 per cent to 5,656.24.
But Hong Kong reversed a morning sell-off to end 0.27 per cent higher at 21,670.58, while Seoul edged up 0.20 per cent, wiping out early losses. And Taipei extended a recent rally, adding 1.94 per cent by the end.
Manila and Kuala Lumpur were closed for public holidays.