China Stock Plunge Spooks Global Markets Again

Stock markets around the world got another jolt Thursday after China halted trading following another big plunge.

China shut down its benchmark Shanghai Composite Index completely after it dropped another 7 percent.

That index is down 12 percent in just the first week of this new year.

Major European indices dropped around 3 percent in response, and U.S. stock markets were also headed for another down day.

The plunge, along with broader concerns about China's economy, Mideast tensions, and North Korea's nuclear program, have hit stocks hard over the past few days.

Thursday's selloff in China came as the government stopped propping up its currency, hoping to boost exports.

"The great concern for global markets is that the dramatic pace of the currency devaluation seems to indicate a far greater weakness in the Chinese economy than is easily perceivable in its publicly released statistics," explained Angus Nicholson, market analyst at IG in Melbourne.

Chinese stock prices collapsed last June, and China's government took emergency steps to try and stop the bleeding.

Now those measures are being pulled out and financial analysts warn that Chinese markets are likely to see extreme volatility for a few more months.

"Sentiment seems to be rather fragile at the moment as the soft macroeconomic environment together with the fear of not being able to sell during a market correction, causing some anxiety among investors," said Gerry Alfonso, trading head at Shenwan Hongyuan Securities in Beijing.