China stocks slump 7pc on opening day of 2016, trading halted for first time
The Chinese share market has been forced to close early after stocks tumbled on the first day of trade for the year, triggering a new "circuit breaker" mechanism.
The system, which came into effect today, forces the market to close if China's CSI 300 index of blue chip shares moves by 7 per cent.
The index fell by as much with an hour-and-a-half left in the trading day, while the Shanghai Composite Index lost 6.9 per cent.
Investors were spooked by private data showing manufacturing activity in the world's second-biggest economy had retreated unexpectedly in December, for the 10th month in a row.
The Caixin manufacturing Purchasing Managers' Index fell to a weaker than expected reading of 48.2.
The survey showed output, employment and new orders all declined, triggering a wave of selling on share markets across Asia, including in Australia.
The selling on the Chinese market was likely intensified by the expected lifting of a ban preventing the major shareholders in Chinese companies from selling their stock.
The six-month ban, which was imposed at the height of China's share market crash in July last year, is due to be lifted at the end of this week.
Chinese ripples reach Australia
News of the Caixin manufacturing Purchasing Managers' Index fall sent Australian stocks into retreat.
The All Ordinaries Index lost 22 points to close at 5,323 and the ASX 200 index fell by 0.5 per cent to finish on 5,271.
Energy stocks rocketed higher, among the few sectors to rise, buoyed by rising oil prices after Saudi Arabia cut diplomatic ties with Iran.
Beach Energy added 6.1 per cent to close at 52 cents. Woodside Petroleum shares added 3 per cent to close at $29.58.
The oil and gas giant said it had found gas in the Rakhine Basin off Myanmar.
The company said it was an encouraging outcome for future exploration and appraisal in the area.
In retail stocks, shares in Dick Smith have been placed in a trading halt as the embattled electronics retailer seeks to shore up its financial position.
The company said it would make an announcement on its funding position and debt financing by Wednesday.
Dick Smith has issued two profit warnings in the last two months, blaming disappointing sales in the months before Christmas. Its shares last closed at 36 cents.
In economic news, a key survey showed capital city house prices rose by 7.8 per cent last year.
The CoreLogic RP Data Home Values Index showed Sydney and Melbourne were the strongest performers of 2015, with price growth of 11.5 and 11.2 per cent, respectively.
Perth and Darwin had the weakest results.
In currencies and commodities news, the Australian dollar has also taken a hit from the weak Chinese factory data.
Around 5:00pm AEDT it was buying 72.1 US cents, 66.2 euro cents, 86.2 Japanese yen and 48.9 British pence.
Spot gold was buying $1,066 US an ounce, West Texas crude oil was buying $US37.08 a barrel and Tapis crude was fetching $US40.85 a barrel.
Source: ABC News