China’s stocks snapped back on Tuesday afternoon after the biggest one-day drop in nearly four year low with fears of a cash crunch driving volatility, The Wall Street Journal reported. The Shanghai Composite Index had fallen 5.8% by the early afternoon as investors dumped shares in banks. However, the benchmark closed down only 0.2% as those same shares were bought back in the last 90 minutes of trading. The quick reversal may have been triggered by a statement from the Shanghai branch of the central bank that said it would guide banks back to reasonable level of liquidity.
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