Back to the drawing board: Chinese shares on track for their biggest fall since January as oil drags down Shenzhen Composite and Shanghai Composite indices

Emma Haslett
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Stocks were more than six per cent lower in mid-morning trading. (Source: Getty)

Chinese shares were down more than six per cent in afternoon trading, their biggest fall since the end of January, as oil lost gains made in recent days.

The Shanghai Composite was more than six per cent lower, at 2,750 points, in mid-afternoon trading in China, while the tech-focused Shenzhen Composite was 6.5 per cent down, at 1,754 points.

Meanwhile, Hong Kong's Hang Seng was down 1.3 per cent, at 18,946 points.

The fall came after WTI crude futures fell 0.9 per cent to $31.86 a barrel, while Brent crude fel 1.1 per cent to $34.04.

That followed a recovery yesterday, with Brent crude finishing 3.3 per cent higher, at $34.41, while WTI rose 0.87 per cent, to $32.15, after data from the US showed demand for gasoline had spiked in recent weeks.

Analysts suggested a meeting of the G20 in Shanghai may also be driving the selloff.

"Expectations in Asia are high for there to be an announcement from the G20 meeting in Shanghai tomorrow," said Angus Nicholson, market analyst at IG.

"Chinese officials have reportedly put the kibosh on any discussion of a major CNY devaluation, and have also dismissed the idea of some sort of Plaza Accords II deal being announced. People’s Bank of China governor Zhou Xiaochuan is set to hold a press conference, which could well be a market mover. Given the selloff... mainland investors might be ready for a bounce on some good news tomorrow."

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