CHINA’S stocks recovered much of their earlier losses by the end of a volatile session yesterday, ending slightly lower.

    The CSI300 index of the largest listed companies in Shanghai and Shenzhen fell 0.35 percent to 2,930.35, while the Shanghai Composite Index lost 0.52 percent to 2,735.56 points.

    The Shanghai gauge, which tumbled 6.4 percent Tuesday to its lowest close since Dec. 1, 2014, pared a loss of as much as 4.1 percent after PetroChina Co., the most heavily weighted stock and long considered a favorite holding of State-linked rescue funds, jumped the most in three weeks.

    China’s markets began the year with a series of precipitous falls and a sharp depreciation in the yuan currency. Selling pressure has persisted as economic data confirmed slowing growth and deteriorating business conditions, hammering investors’ confidence in stocks.

    Gu Yongtai, analyst at Cinda Securities, said the prospect of investors having to sell stocks they bought with borrowed money in order to cover margin calls has also hurt sentiment.

    “There’s fear that stock price falls would trigger margin calls, which then adds further pressure on prices, although the actual amount of forced liquidation is not as big as people would imagine,” Gu said.

    Four listed companies suspended trading in their shares yesterday, saying their major shareholders, who have pledged shares as collateral, face margin calls and would seek ways to avoid forced liquidation.

    “If the market continues to fall, equity pledging-related selling pressure could increase significantly, putting further pressure on the stock market,” said Gao Ting, the head of China strategy with UBS Securities.

    Trading volumes have thinned, making price moves even more volatile, as many investors have given up on Chinese stocks since last summer, when shares crashed 40 percent.

    China’s woes have also damaged risk appetite in global markets, which have also been hit by tumbling oil prices. (SD-Agencies)