China launches probe as stock market crumbles

China’s regulators launched a probe into suspected market manipulation as stocks once again fell on Friday, extending this week’s run of losses to ten per cent.

Shares on the Shanghai Composite Index have crumbled by 30 per cent since their mid-June peaks, prompting the China Securities Regulatory Commission (CSRC) to look at "clues of illegal manipulation across markets", Reuters reported.

On Thursday (July 2nd), the Shanghai benchmark slid below 4,000, a key resistance level, for the first time since April. Friday saw the index shed another five per cent.

Interest rate cuts and relaxation of margin lending rules have failed to stem the sell-off in recent weeks.

Shares in Hong Kong also ended lower, while the Nikkei 225 in Japan was almost unchanged.

Markets in Europe were lower on Friday as investors wait for Greece’s referendum on Sunday. US markets are closed for the Independence Day holiday.

London’s FTSE 100 dropped 0.3 per cent, while the FTSEurofirst 300 was down by a similar margin. The Stoxx Europe 600 Index was on course to end the week down more than three per cent.

Meanwhile, the US dollar was nursing losses in thin trade after a weaker-than-expected non-farm payrolls report curtailed bullish sentiment.

US employers added 223,000 jobs last month, raising doubts about whether the Federal Reserve will hike rates in September.

The euro was up quarter of one per cent on Friday as the single currency remained defiant in the face of the Greece crisis, although it was set to close the week down by roughly a cent.

Sterling rose slightly against the greenback but remains near a three-week low.

Australia’s dollar touched on its lowest level against its US counterpart since May 2009 as ore prices slipped on a slowdown in China’s steel industry.

Oil was headed for its worst week since March after downbeat supply data weighed on prices.