Shanghai stocks closed down 7.63 percent on Tuesday, piling on fresh heavy losses after their worst daily fall since 2007 sparked panic selling around the world.

China’s benchmark Shanghai Composite Index dropped 244.94 points to 2,964.97 on turnover of 358.7 billion yuan ($56.1 billion) after slumping as much as 8.16 percent during the day.

The close was the lowest since December 15 last year — and below the symbolically significant 3,000 point mark — while Bloomberg News said it marked the steepest four-day rout since 1996.

The Shenzhen Composite Index, which tracks stocks on China’s second exchange, slumped 7.09 percent, or 133.39 points, to 1,749.07 on turnover of 288.0 billion yuan.

Shanghai’s finish was more than 42 percent lower than its closing peak on June 12, when it capped a stunning debt-fuelled rally that has since burst in spectacular fashion.

Shanghai shares collapsed 8.49 percent on Monday, sparking a vast sell-off in global financial markets as concerns mounted that a slowdown in the world’s second-largest economy could hurt global growth.

“Investors are scared to buy stocks now, even the ones with good fundamentals and good prices, because they don’t know where the bottom is for the market,” Citic Securities analyst Zhang Qun told AFP.

Beijing launched a huge rescue package after shares collapsed in June, which has included funding the China Securities Finance Corp. (CSF) to buy stocks on behalf of the government and barring major shareholders from selling their stakes.

Photo: Wikicommons.

In the latest move, Beijing said on Sunday it will allow the state pension fund — which had 3.5 trillion yuan of assets at the end of 2014 — to buy stocks.

But investors are now waiting to see if the “national team”, meaning entities buying stocks for the government, will intervene to prop up the market and whether China’s central bank will further loosen monetary policy.

“It’s a panic sell-off and the market has overreacted,” Chen Jiahe, chief strategist for Cinda Securities, told AFP.

Energy firms were among the biggest losers in Shanghai. PetroChina slumped by its 10 percent daily limit to 8.56 yuan while Sinopec also ended down 10 percent to 4.49 yuan.

Heavyweight banks also fell. In Shanghai, banking giant ICBC slid 5.12 percent to 3.89 yuan while Bank of China plunged 8.16 percent to 3.49 yuan.

Update 16:28: Hong Kong shares closed 0.72 percent higher on Tuesday, clawing back early losses after a slump in Chinese shares left global equity markets trembling. The benchmark Hang Seng Index added 153.39 points to close at 21,404.96 on turnover of HK$134.50 billion (US$17.35 billion).

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