Global shares have fallen sharply after trading was suspended on Chinese markets for the second time this week.
Wall Street followed the downward trend, with indexes sliding about 1%, while European shares were down about 2% in late afternoon trading.
Circuit-breakers triggered the Chinese share suspension following a 7% fall in the country`s main index.
Later on Thursday, the Chinese authorities said they were suspending the circuit-breaker system.
The mechanism was brought in late last year to reduce volatility on China`s markets and had not been triggered until this week. It will be lifted from Friday.
The slump on Chinese markets prompted renewed panic on global markets. Share dealing was halted in the first 30 minutes, making it China`s shortest trading day on record.
By 15:00 GMT the FTSE 100 share index in London had recovered slightly and was 1.96% lower at 5,954.15.
Germany`s Dax was worst affected, down 2.54% at 9,954.57, while France`s Cac-40 was down 1.8% at 4,399.63.
Amid the uncertainty, the euro gained nearly a cent against the dollar, rising to $1.0868.
The pound fell against the euro by 0.92% to €1.3445.
Investors are nervous after the Chinese central bank moved to weaken the the country`s currency, the yuan, for the eighth day running, sparking fears of a currency war.
This move is designed to boost exports by making Chinese goods cheaper outside the country, analysts have speculated.
It is also being interpreted as an indication that consumer demand in China may be slowing more sharply than feared.
Official economic growth in China is still running at just below 7%.
But moves to devalue the yuan suggest attempts to shift the economy from an export-led one to a consumer and services-led one are running into problems.
Legendary US billionaire investor George Soros has warned that 2016 could see a global financial crisis on as big a scale as that seen just eight years ago.
Giving a speech to an economic forum in Sri Lanka, Mr Soros said China faced a " major adjustment problem."
He added: "I would say it amounts to a crisis. When I look at the financial markets there is a serious challenge which reminds me of the crisis we had in 2008, according to Bloomberg.
It is not the first time the billionaire hedge fund manager has warned of impending doom on the financial markets. In 2011 he warned the Greek debt crisis that consumed Europe was more serious than the 2008 financial crisis.
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