China Market Storm Hits the Global Shares

Trading on the Chinese markets was suspended for a second time this week and global shares fell sharply. Wall Street followed the downward trend, with indexes sliding about 1%, while European shares were down about 2% in late afternoon trading.

Circuit-breakers triggered the Chinese share suspension following a 7% fall in the country's main index.

Later on Thursday, the Chinese authorities said they were suspending the circuit-breaker system.

The mechanism was brought in late last year to reduce volatility on China's markets and had not been triggered until this week. It will be lifted from Friday.

The slump on Chinese markets prompted renewed panic on global markets. Share dealing was halted in the first 30 minutes, making it China's shortest trading day on record.

By 15:00 GMT the FTSE 100 share index in London had recovered slightly and was 1.96% lower at 5,954.15.

Germany's Dax was worst affected, down 2.54% at 9,954.57, while France's Cac-40 was down 1.8% at 4,399.63.

Amid the uncertainty, the euro gained nearly a cent against the dollar, rising to $1.0868.

The pound fell against the euro by 0.92% to €1.3445.

Investors are nervous after the Chinese central bank moved to weaken the country's currency, the yuan, for the eighth day running, sparking fears of a currency war.

This moveis designed to boost exports by making Chinese goods cheaper outside the country, analysts have speculated.