Shanghai - Chinese shares opened lower on Tuesday after oil prices dropped again, reviving concerns about global growth and prompting a sell-off in equity markets.
The benchmark Shanghai Composite Index was down 1 percent in early trade, while the CSI300 index of the largest listed companies in Shanghai and Shenzhen fell 0.8 percent.
After a rebound on Friday and early on Monday, US crude prices fell back below $30 a barrel, not far from last week's 12-year lows, ending a couple of days of gains for Wall Street stocks.
China's fickle stock markets have slumped 16-17 percent so far this year on concerns about the slowing economy and confusion over the central bank's foreign exchange policy.
Trading volumes are thin as many investors have lost the stomach for the market after a wild ride since last summer, when shares crashed 40 percent. Beijing intervened to stem that rout and orchestrate a recovery of sorts, but anyone who mistook that for a bottom and bought in will have lost their shirt again in January.
Investors remain wary about further weakness in the yuan, too, despite assurances from Beijing that it has no intention of pushing it lower to gain a competitive advantage.
Chastened by the market's bearish reaction to an early January depreciation in the yuan, the People's Bank of China (PBOC) has since kept the yuan's daily midpoint fixing little changed.
Spot yuan was at 6.5790 on Tuesday, flat with Monday's close, while offshore it was at 6.6100, about 0.5 percent weaker than the onshore rate.
In a move that could help ease market strains, Japan and China, Asia's two largest economies, said on Tuesday they were working to create a new framework to discuss economic policy co-ordination, such as steps to stabilise the yuan, the Nikkei newspaper said on Tuesday.
China's central bank has jolted global financial markets twice in six months by allowing sharp, sudden slides in the currency, only to step in aggressively to stabilise it.
The central bank has also been making plenty of liquidity available to the banking system to avoid any tightness ahead of the Lunar New Year celebrations. Traders said on Tuesday that the bank would inject 440 billion yuan into the money markets, the biggest daily injection in three years.
The decline in the yuan and concerns about the country's growth prospects have fuelled a flight of capital out of the world's second-largest economy which policymakers are struggling to contain.
Other stock markets in Asia were also down on Tuesday, with Japan's Nikkei slipping 2 percent and MSCI's broadest index of Asia-Pacific shares outside Japan down 1.1 percent.
All eyes will be on a US Federal Reserve meeting this week to see whether it acknowledges concerns over the faltering Chinese outlook and global market turmoil and whether that will delay any interest rate increases this year.
REUTERS