SHANGHAI (Reuters) - Chinese stocks fell on Thursday in another highly volatile session even as regulators intensified efforts to put a floor under the sliding market.
Before the market opened, China's securities regulator relaxed rules on using borrowed money to speculate on stock markets, the latest in a flurry of government measures aimed at stemming two weeks of panic selling that is posing a growing risk to the world's second-largest economy.
On Wednesday evening, China's two major stock exchanges in Shanghai and Shenzhen said they will cut transaction fees effective Aug. 1. China stocks had tumbled some 5 percent earlier in the day, taking losses since mid-June to more than 20 percent.
Bernard Aw, market strategist for IG in Singapore, said that the most significant move was the China Securities Regulatory Commission's (CSRC) decision to allow "reasonable rollover" of margin trading positions.
"The margin rollover will likely help reduce the pace of margin calls, and also cushion the decline of outstanding margin debt," he said.
But the moves appeared to have done little to inspire an immediate turnaround in sentiment, with primary indexes slipping again in morning trade.
At 0517 GMT, the CSI300 index had erased much of its earlier losses, but was still down 1.1 percent. The Shanghai Composite Index, off more than 3 percent earlier, was down 2.1 percent.
China CSI300 stock index futures for also July, pointing to further losses.
NEEDED: A STABLE MARKET
The People's Daily, official mouthpiece of the ruling Communist Party, said in an editorial that China needs a stable, transparent stock market.
Domestic investors have seen the sharp correction of Chinese markets as an embarrassment for the country and the government, and many have blamed foreign "ghosts", including the U.S. government, for trying to engineer the collapse by shorting shares in state-controlled train maker CRRC Corp.
"Who is gonna win? It must be China, we cannot lose!" wrote one anonymous poster in a widely recirculated comment on domestic social media.
"If we lose, the global media will report that the Chinese stock market collapsed on the day that the China-backed Asian Infrastructure Investment Bank was established ... Where is our prestige?"
The rumours have been widespread enough that regulators saw fit to publicly deny that foreign investors including Goldman Sachs were shorting the market.
Chinese markets, which had risen as much as 150 percent from November to a peak in June, have collapsed at an incredibly rapid pace in since June 12, losing more than 20 percent in jaw-dropping volatility as money as surged in and out of the market.
(Editing by Kim Coghill and Alex Richardson)
