HONG KONG (AFP, REUTERS) - Shanghai and Hong Kong stocks climbed into positive territory in extremely volatile trade Thursday while other Asian markets pared early losses after China announced new measures to staunch a mainland rout that has fuelled fears about the wider economy.
Shellshocked traders have been sent scurrying as the crisis in China, which has wiped trillions off of valuations, combine with fears about Greece's future in the eurozone.
Commodity prices were also sideswiped, with one analyst saying a tonne of iron ore was now cheaper in China than a tonne of cabbage.
Shanghai tumbled 3.40 per cent at the open before surging almost three per cent higher - a six per cent swing overall - while Hong Kong lost 0.45 per cent soon after opening and then surged more than four percent at one point.
By 0235 GMT Shanghai was up 0.10 per cent and Hong Kong added 2.86 per cent.
Tokyo was off 0.70 per cent - clawing back losses of more than three per cent earlier in the day - while Sydney dipped 0.50 perc ent and Seoul was 0.69 per cent lower.
The Straits Times Index was down 0.27 per cent at 3,276.10 at around 11:10am, after tumbling 1 per cent on opening.
China's stock markets have plunged roughly 30 per cent over the last three weeks, with a series of increasingly aggressive attempts by authorities so far having failed to stem the massive exodus from a once-booming market.
China's securities regulator took the drastic step late on Wednesday of ordering shareholders with stakes of more than 5 percent from selling shares for the next six months, in a bid to halt a plunge in stock prices.
Also, Xinhua news agency reported that China's police will investigate potentially "malicious" short-selling of shares. "Fundamentally, China is coming back to a point of attraction - the monstrous P/E ratios have come back to more realistic levels," Evan Lucas, market strategist at IG in Melbourne, wrote. "However, the bursting bubble means value is unlikely to factor into thinking in the interim. The repercussions haven't completely played out yet."
Shanghai stocks had risen more than 150 per cent in the 12 months to its June 12 peak in a borrowing-fuelled frenzy enhanced by hopes for economy-boosting measures by the government.
But analysts said new restrictions on margin trading and concerns about the overvaluation of many stocks have forced mainland investors - mostly individual retail traders - to cash out.
"We're clearly in the middle of a market panic of some magnitude in China and unfortunately the regulator response has really been quite harmful so far," Michael Shaoul, chief executive officer at Marketfield Asset Management in New York, told Bloomberg TV.
On commodities markets the spot price of iron ore, a key export to China, took its biggest one-day hit ever overnight, falling 10 per cent to US$44.59 a tonne - its lowest since May 2009.
"The risk from Chinese equities markets is clearly impacting commodities markets," IG Markets strategist Evan Lucas said in a note. "The steel price in China is now cheaper per tonne than cabbage."
While copper jumped as the US dollar slipped, oil prices also eased although they recovered slightly Thursday.
US benchmark West Texas Intermediate for August delivery was up two cents at US$51.67 and Brent crude for August rose five cents to US$57.10.
Gold fetched US$1,156.67 compared with US$1,155.39 late Wednesday.
Nervousness among traders sent funds into low-risk investments, pushing the safe-haven yen higher.
The Japanese unit was changing hands at 120.84 to the US dollar and 133.72 to the euro Thursday, hardly changed from New York but much stronger than the 122 and 135 ranges seen at the start of the week.
Dealers are also tracking events in Europe after Greece was given a Sunday deadline to come up with a bailout reform plan its creditors find acceptable or face ejection from the eurozone.
European leaders slapped the ultimatum on Athens after last weekend's referendum in which Greek voters rejected austerity-packed reforms in return for more cash.
They have warned the country's leadership that if it does not provide detailed measures, a contingency plan is in place to deal with its removal from the euro area.
European equities brushed off the huge losses in Asia to end higher on hopes for a resolution to the Greek crisis after Prime Minister Alexis Tsipras vowed to present "credible" reform plans.
"European equities (are) positive (which) suggests hope of progress before the weekend deadline," noted Mike van Dulken, head of research at Accendo Markets.
Frankfurt added 0.66 per cent, Paris rose 0.75 per cent and London was up 0.91 per cent.
In foreign exchange trade Thursday the euro was at US$1.1070 against US$1.1074 in New York but well up from the levels below US$1.1000 earlier Wednesday in Asia.