By Samuel Shen and Pete Sweeney
SHANGHAI (Reuters) - Chinese shares struggled on Wednesday after plunging in the previous session, taking little comfort from a rise in global markets, though sentiment is fragile ahead of a policy statement later from the U.S. Federal Reserve.
The benchmark Shanghai Composite Index opened up slightly but then quickly turned tail and was down 0.4 percent by 0150 GMT. On Tuesday, it tumbled 6.4 percent to its lowest close since Dec. 1, 2014.
The CSI300 index of the largest listed companies in Shanghai and Shenzhen also attempted to move higher at first before dropping 0.3 percent.
Stocks on Wall Street were given a lift overnight as crude prices, which hit a 12-year low last week due to oversupply and concerns about faltering global growth, bounced back over the $30 mark overnight on hopes of output cuts.
Investor sentiment across the world will hang on whether the market chaos of the last few weeks and concerns over China's slowing economy might blow the U.S. Fed off its proposed course of gradual interest rate hikes.
It raised interest rates in December for the first time in a decade, and the prospect of more such hikes has been unsettling currency and equity markets.
China's stock markets have slumped about 22 percent so far this year, knocking nearly 12 trillion yuan ($1.8 trillion) off the value of the indexes as of Tuesday night.
Selling has been spurred by concerns about the cooling economy, fears that the central bank will allow the yuan currency to weaken further and a broader loss of confidence in risky assets.
Trading volumes have thinned as many investors have given up on Chinese stocks after a wild ride since last summer, when shares crashed 40 percent.
Beijing intervened to stem that rout and orchestrate a recovery of sorts, but anyone who mistook that for a bottom and bought back in will be nursing hefty losses again.
Investors are also wary of further weakness in the yuan, though the People's Bank of China (PBOC) has kept the currency's daily midpoint fixing little changed since setting it sharply weaker in early January.
Spot yuan was at 6.5793 on Wednesday, a little firmer than Tuesday's close, while offshore it was 6.6115, a 0.5 percent discount to the onshore rate.
China's central bank has jolted global financial markets twice in six months by allowing sharp, sudden slides in the currency, only to step in aggressively to stabilise it and deter speculation.
The central bank has been making plenty of liquidity available to the banking system to avoid any cash squeeze ahead of long Lunar New Year celebrations beginning in early February.
But those funds are largely of a short term nature, and the massive injections may have dashed some investors' hopes that the PBOC would cut banks' reserve requirements (RRR) soon to free up more money for longer term lending.
The decline in the yuan and concerns about the country's growth prospects have fuelled a flight of capital out of the world's second-largest economy which policymakers are struggling to contain.
Some hedge funds are still betting that Beijing won't be able to stem the outflow and the currency will have to fall.
China posted its slowest growth in 25 years in 2015, and the new year has seen a slew of weak economic indicators, including data on Wednesday that showed profits at Chinese industrial firms fell 4.7 percent in December from year earlier..
Companies also say they are having a tougher time, among them Apple Inc, which said overnight that while its revenue in Greater China was still rising, it was seeing "some signs of economic softness".
Other stock markets in Asia were higher on Wednesday, with Japan's Nikkei reversing Tuesday's drop to stand 2.8 percent higher, and MSCI's broadest index of Asia-Pacific shares outside Japan up 0.9 percent. [MKTS/GLOB]
($1 = 6.5782 Chinese yuan renminbi)
(Writing by Will Waterman; Editing by Kim Coghill)
