Stocks Plunge in China

Shares plunged overnight in China after the government boosted a tax on stock transactions.

The Shanghai Shenzhen Composite dropped 282 points, or 6.5%, to 4053 in their biggest setback since a February plunge that shaved 9% off the index in a single day. The decline came the day after the index set the latest in a long series of all-time highs at 4334.

The 550-point decline in the so-called Red Chips back on Feb. 27 set off a brief worldwide selloff as traders worried that a bubble was unwinding after a long rally in Chinese stocks. Shares across the world dropped sharply over the next two days. But shares have more than recovered since then, and China's market is up more than 35% off the late February lows.

This time around, traders appeared less concerned, as global markets were only modestly lower following the latest China selloff.

Through Tuesday, Shanghai's benchmark index had climbed 62% this year, following a 130% surge in 2006, the Associated Press reported.

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