The Shanghai Composite Index .SSEC ended down 1.3 percent, its fifth straight day in the red as Beijing also dished out another round of trading bans.
U.S. stocks had slumped in the last hour of a volatile session on Tuesday as investors looked to avoid overnight exposure.
Chinese shares have been highly volatile in recent months, plunging almost a third in a matter of weeks in June, after having risen over 150 percent in the preceding year.
After the collapse, Beijing intervened with a rescue package that included funding the state-backed China Securities Finance Corp. (CSF) to buy stocks on behalf of the government.
The CBOE Market Volatility Index .VIX was still elevated at 34, indicating significant uncertainty, but the “fear index” was well below Monday’s 6-1/2 year peak of 53.3.
Most U.S. Treasuries prices turned positive on Wednesday, erasing earlier losses, after New York Federal Reserve President William Dudley said a U.S. Federal Reserve September rate hike seems less compelling than a few weeks ago in the wake of recent global market turmoil.
The dollar index, which measures the greenback against a basket of major currencies, fell after the comments but was up 0.3 percent later in the morning.
Despite China’s struggles, Asia markets had some bright spots. Japan’s Nikkei .N225 saw a 3.2 percent jump and Korea’s KOSPI .KS11 showed its biggest jump in two years with a 2.6 percent increase.
Oil prices were hurt by a bigger than expected increase in U.S. gasoline stocks, compounding negative sentiment from worldwide equities that pushed fuel prices to 6-1/2-year lows.
Brent crude futures LCOc1 were last down 0.4 percent at $43.04 per barrel, while U.S. crude CLc1 was down 0.7 percent at $39.05.
Copper CMCU3, often considered a proxy for Chinese and global economic activity, was down 2.7 percent tumble while prices of gold XAU=, traditionally a safe-haven asset, were off 1.5 percent
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