World stocks have inched up from 2-1/2-month lows as China pumped in an estimated $US20 billion to stabilise its equity and currency markets, which recorded the worst opening day's trade in years in the previous session.
Despite the huge cash injections, Chinese shares listed in Shanghai and Shenzen ended no better than little changed and the yuan fell to a new 4-1/2-year low in offshore trade.
"China's actions are certainly positive at the margin ... but overall the risk is that it is interpreted as a signal of weakness that these ongoing struggles to stabilise the market by the authorities aren't really bearing fruit," Commerzbank strategist, Michael Leister, said.
Panic selling on Monday, mostly by China's army of small retail investors, sent shares diving 7 per cent, setting off a worldwide reaction and pushing MSCI's global index 2 per cent lower.
The global index rose 0.2 per cent on Tuesday, though many big Asian bourses including Japan, Australia and Hong Kong closed in the red.
European shares opened higher, but these gains quickly evaporated. At 0915 GMT the FTSE pan-European index was flat at 1,401 points after Monday's 2.5 per cent fall.
Bourses in Frankfurt, Paris and London were also unchanged after opening around 1 per cent higher. .
Stock futures pointed to a firmer opening for Wall Street, with S&P e-mini futures up 0.25 per cent.
Emerging equities, having posted their biggest one-day fall since August, stayed close to those lows.
Many analysts predicted that investors would view any bounce as a chance to sell, given the economic gloom across much of the world, weak commodity prices and the escalation of political risk in the Middle East, where Iran and Saudi Arabia are facing off over Riyadh's execution of a Shi'ite cleric.
"The price action reminds investors that the world is more connected than ever; volatility is likely here to stay, and liquidity may suffer if investor uncertainty worsens," analysts at Citi said in a note.
Manufacturing surveys across the globe this week showed activity to be anaemic, with China and the United States both surprising on the downside.
That was one reason both the S&P 500 and the Nasdaq suffered their worst starts to a year since 2001, while oil prices, despite simmering Gulf tensions, remain near recent 12-year lows
Furthermore, the end next Monday of a 6-month "lockup" on Chinese share sales by major institutional investors, may cause a massive evacuation from stocks, many fear.
The nervous backdrop, following on from last month's U.S. rate rise, the first in almost a decade, has boosted the dollar further against a basket of currencies following gains of around 11 per cent in 2015.
The dollar index rose 0.14 per cent while the euro fell towards a one-month low against the greenback, down a quarter of a per cent. The yen inched up 0.2 per cent but stayed off Monday's highs.
Concerns are also focused on the yuan which hit a new trough, aggravating the share market slump. China's currency has stabilised after interventions but the gap between the tightly managed onshore yuan and its freer offshore counterpart widened to 1.7 per cent .
In the non-deliverable forward markets (NDFs) the yuan is trading around 6.87 per dollar, much weaker than its spot rate around 6.52 and approaching seven-year lows.
That is taking a toll on China-linked currencies such as the Australian and New Zealand dollars which were flat after falling more than 1 per cent on Monday . Other emerging currencies including the Indonesian rupiah and the Russian rouble slumped between 0.4-0.8 per cent.
