New | Wall St sinks after China slides again over poor data

Wall Street, European and Asian stocks tumbled on Tuesday after data showing contraction in China's manufacturing sector dragged down mainland Chinese and Hong Kong markets, despite efforts by the "national team" to stem the slide and declarations by mainland brokerages to buy more stocks.

US stocks opened sharply lower as poor China data sparked another round of global sell-offs. Five minutes into trade, the Dow Jones Industrial Average was down 1.94 per cent while the S&P 500 lost 1.92 per cent and the Nasdaq Composite gave up 1.96 per cent. Some 99 per cent of the S&P 500 constituents were in negative territory at press time.

European stock markets sank by about 3 per cent, with the metals and mining sector hit hard by demand worries in China. London's benchmark FTSE 100 index of top blue-chip companies shed more than 3 per cent, while Frankfurt's DAX 30 index and Paris CAC 40 also lost about 3 per cent.

The stock slump in the West followed a bruising day on Asian markets led by the benchmark Shanghai index that dropped up to 4 per cent after the official purchasing managers' index (PMI) released in the morning showed the country's manufacturing sector contracted at its fastest pace since 2012. The official August PMI fell to 49.7 from 50 in July. Any reading below 50 indicates contraction.

The Shenzhen Composite Index closed the day down 4.61 per cent at 1,707.78 points. After the steep drop in early sessions, the Shanghai Composite Index recovered some lost ground as the "national team" tasked with propping up shares stepped in to snap up state-owned blue chips in the afternoon. The benchmark eventually closed 1.23 per cent lower at 3,166.62 points.

"Investors are extremely sensitive now. While the economic data painted a gloomy picture in China, investors are also anxious about the likelihood of a US interest rate rise in September. This month will be a critical period for us," said Linus Yip, the chief strategist with First Shanghai Securities.

Hong Kong's benchmark Hang Seng Index closed the day 2.24 per cent lower at 21,185.43 points.