Markets Find Calm After Share Sale Storm

World markets (Xetra: 4WM.DE - news) had a calmer day after China's top share index was spared a late-trading bloodbath ahead of a four-day public holiday.

In London, the FTSE 100 index of leading UK shares closed up 0.4% following big falls during the previous session.

Germany's DAX rose 0.3% and France's CAC 40 increased 0.3%, while on Wall Street, the Dow Jones industrial average added 1.8%.

The Shanghai Composite lost more than 4% of its value in early deals on Wednesday but values later recovered - to close just 0.4% lower on the day - after Chinese brokerages pledged more support to the market.

There was speculation the authorities exerted some pressure - with the China Securities Journal reporting that nine brokerages had promised additional funds worth over 30bn yuan (£3.1bn) to buy shares.

The news agency Reuters added that fund managers were living in fear under tighter scrutiny of investment activity by Government regulators, who are keen to arrest volatility that has wiped 40% from Shanghai's value in recent months.

The latest intervention emerged ahead of what was the final trading session for Chinese markets ahead of a public holiday to commemorate the 70th anniversary of Japan's defeat in World War Two.

Trading in China will resume again on Monday.

Wednesday's trading helped keep values relatively stable across Asia following sharp falls worldwide on Tuesday - with investors reacting to fears of a US rate rise alongside disappointing manufacturing data for not only China but also the US, UK and the eurozone.

The slowdown in China remains in sharp focus for investors amid fears it is worse than official figures are suggesting.

China needs annual GDP growth above 5% to maintain employment levels - with Beijing expecting growth of 7% this year.

The latest figures to spook the markets suggested manufacturing activity was at a three-year low.

Evidence of global concern was acknowledged on Wednesday by the International Monetary Fund's (IMF) managing director, Christine Lagarde.

She (Munich: SOQ.MU - news) told reporters: "We are certainly talking to the Chinese authorities about their transition to a more market-determined economy, to an internationalisation of their currency.

"It (Other OTC: ITGL - news) 's a very significant transition, one that hopefully can be managed in an orderly fashion."