Stocks stabilize in Asia after gyrating in China

HONG KONG -- Asian stocks recovered from sharp losses in extremely volatile trading Wednesday as investor sentiment improved amid reports of renewed Chinese government efforts to bolster share prices.

The coming session on Wall Street also looked promising early Wednesday, with futures for the 3 main indexes up about 1 percent each.

On Tuesday, the major U.S. benchmarks finished sharply lower after pessimistic factory data was released. The Dow Jones Industrial Average lost 2.8 percent to end the day at 16,058.35, the S&P 500 fell 3 percent to 1,913.85 and the Nasdaq composite fell 2.9 percent to 4,636.10.

The Shanghai Composite Index in mainland China opened 4.4 percent lower Wednesday before scratching out a gain by midday, then slipping 0.4 percent.

Other Asian benchmarks also swung between gains and losses. Hong Kong's Hang Seng slipped 0.3 percent while South Korea's Kospi edged up 0.2 percent. Japan's benchmark Nikkei 225 index climbed 0.1 percent and Australia's S&P/ASX 200 fell 0.1 percent.

The Shanghai market saw its last day of trading Wednesday before a two-day holiday to celebrate Japan's defeat in World War II.

Some analysts suspected Beijing was intervening after an initial plunge to prop up share prices heading into the holiday. Investor sentiment also improved on other signs that Beijing was stepping in, including a China Securities Journal report that said nine brokerages have pledged 30 billion more yuan for stock buying, adding to 100 billion yuan put up by 50 brokerages over the weekend.

"The 'National Team' is out in force today in the Chinese markets," said Angus Nicholson, of IG Markets, referring to state-owned agencies that have been used to support the market. The government "has been busying itself in the stock markets, scaring off any bearish sentiment."

After the release dismal manufacturing data from China and the U.S. on Tuesday, investors will be poring over other U.S. economic data Wednesday as well as the Federal Reserve Board's "Beige Book" survey of economic conditions due out later in the day.

On Friday, monthly U.S. jobs data will also provide further clues for investors, as uncertainty over whether Fed officials will raise rates this month continues to overshadow markets.

International Monetary Fund Managing Director Christine Lagarde said in a speech in Indonesia that global economic growth is likely to be weaker than expected. Asia is still expected to lead global growth, but the pace is slowing and could sag further because of recent financial market volatility.

"Overall, we expect global growth to remain moderate and likely weaker than we anticipated in July," Lagarde said. That reflects "weaker-than-expected recovery in advanced economies and a further slowdown in emerging economies, especially Latin America," she said.