US stocks open modestly higher as markets stabilize

German and French stocks were down 0.6 percent after opening around 1 percent higher while Britain’s FTSE 100 index was down 0.1 percent.

Analysts suggest that bad loans will continue to pose a challenge for China’s biggest banks in 2016.

The European Central Bank was under pressure to do yet more after German inflation proved surprisingly weak in December, pushing down bond yields and slugging the euro.

“Let’s face it, any negative vibe out of China has global ramifications”.

But now that China is maturing into a more developed market, its appetite for raw goods has eased considerably.

Investors read it as a sign that China’s economy might be slowing down faster than previously thought.

“Many of China’s newly introduced “circuit-breakers” look to have only compounded panic selling yesterday as investors rushed to get their sell order out the door before they got caught in a limit-down”, Angus Nicholson, market analyst at IG in Melbourne, worte in a note. The government’s manufacturing gauge, which focuses on large enterprises, painted a rosier picture than the Caixin report. The fall is ahead of weekly US crude inventory and production data later in the day.

On Wall Street, the S&P 500 slipped 0.2pc by 5.30pm, while the Dow Jones industrial average and the Nasdaq Composite index lost 0.6pc and 0.7pc, respectively.

Crude oil was lower as investors fretted about the state of the Chinese economy and a stronger dollar. Minutes from the U.S.Federal Reserve’s December policy meeting, where officials voted to raise benchmark interest rates for the first time in almost a decade, will be released later in the day.

Sanjiv Shah, chief investment officer at Sun Global Investments, said Beijing’s latest attempts to steady its equity and currency markets reflected the depth of the concerns rippling across world markets.

So China’s sometimes-bumpy efforts to open up its financial markets can create turbulence.

Later Wednesday, investors will return to the subject that dominated trade past year: US monetary policy.

But European markets were heading for a second session in the red.

The policymaker’s remark comes after Choi Hee-nam, deputy finance minister for global affairs, said after an emergency meeting earlier in the day that Monday’s scare may have been due to “technical issues” like the introduction of the circuit breaker system.

Monday’s plunge threatened Beijing’s six-month campaign to restore confidence in stock markets since the summer crash, which saw indexes lose as much as 40 per cent in a few weeks.