China's Refusal to Provide Aid to Markets Causes Waves in Global Markets.

Online, June 25, 2013 (Newswire.com) - Shares in China plunged 5% amid warnings from the government there that it would not nurse the economy back to health - sending global stock markets headed into further turbulence.

A recent publication declared: "The securities regulatory committee is not the stock market's wet nurse, nor is the central bank."

The lively language followed a US central banker warning what he termed the "feral hogs" in the market against trying to force the Fed to keep the QE taps turned on.

China's ruling Communist Party used its mouthpiece, the People's Daily, to make it clear that it would not be providing fresh cash to boost the markets. Recent days have seen the central bank turn off the flow of cheap money in an effort to force the country's banks to be more disciplined in their lending. But the drastic move has triggered big rises in interest rates and concerns about growth in the world's second biggest economy.

However, after the initial heavy sell-off in China, the Beijing market recovered to close almost flat on the day, leading most western markets to make some minor recoveries after yesterday's falls.

The FTSE 100, which fell 1.4 per cent yesterday, was up more than 1 per cent; Germany's Dax, down 1.2 per cent yesterday, was up 1.4 per cent; and the CAC-40 in France rallied 1.3 per cent after the previous session's 1.7 per cent decline.

This is still very much a buyer-beware market. It was mainly the safer stocks like tobacco and telecoms that were rising, as opposed to sectors like mining which makes gains when confidence is high.

Though the Chinese declaration caused some ripples in markets around the world, Sonata Financial analysts say that the paper is unlikely to have a significant effect beyond short the term blips.