LONDON (AP) -- Asia's main stock markets continued to fall Tuesday on concerns that trouble in China's credit system could hurt growth in the world's second-largest economy. Markets stabilized elsewhere, however, with European indexes rebounding.
Chinese stocks extended the previous day's heady declines as investors worried that measures to curb so-called shadow banking — the unregulated lending to companies starved of credit by China's traditional banks — would cause an increase in borrowing rates for many companies, hurting business.
The Shanghai Composite Index fell another 0.2 percent to close at 1,959.51 after plunging nearly 6 percent the day before, its biggest loss in four years.
The jitters caused a sell-off across the globe on Monday, but nerves seemed steadier outside Asia on Tuesday.
In Europe, Britain's FTSE 100 recovered some of the previous day's losses, adding 1 percent to 6,087.44 in early trading. Germany's DAX rose 1.5 percent to 7,809.23 and France's CAC-40 gained 1.4 percent to 3,645.77.
Wall Street also appeared set to recoup losses from the day before. Ahead of the opening bell, Dow Jones industrial futures were up 0.6 percent to 14,672. The broader S&P 500 futures were also 0.6 percent higher, at 1,576.30.
Besides China's credit problems, markets have also been jolted by an increase in U.S. bond yields. The rise is due to expectations that the Federal Reserve will soon start winding down its monetary stimulus, allowing borrowing rates to edge up from their current lows as the economy improves.
The Fed's bond-buying stimulus program has been keeping rates low, encouraging traders to buy riskier assets such as stocks and to invest in emerging markets, driving many equity indexes to record or multiyear highs. Concern over how markets will handle the end to the program, however, has made investors nervous and caused volatility.
Investors will later in the day monitor U.S. figures on durable goods sales and consumer confidence to judge the strength of household spending, a key pillar of the world's largest economy.
Elsewhere in Asia, Hong Kong's Hang Seng rose 0.2 percent to 19,855.72, overcoming earlier losses, while the Shenzhen Composite Index lost 0.2 percent to 879.93.
Japan's Nikkei 225 shed 0.7 percent to 12,969.34. South Korea's Kospi dropped 1 percent to 1,780.63 and Australia's S&P/ASX 200 was down 0.3 percent to 4,656. Stocks in the Philippines and Indonesia also declined while India and Singapore gained.
In energy markets, the benchmark oil contract for August delivery was up 62 cents to $95.80 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.49 to close at $95.18 in New York on Monday.
In currencies, the euro was steady at $1.3119 while the dollar fell 0.5 percent against the Japanese yen, to 97.26 yen.
Youkyung Lee in Seoul, South Korea, and Fu Ting in Shanghai contributed to this report.
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