Volatility rules the day on Shanghai exchange

Chinese stocks closed 1.27 percent lower despite spending roughly half the trading session in positive territory on Wednesday, dampening investors' hopes that fresh interest rate cuts by the central bank would stabilize the economy and put the brakes on a stock market meltdown that saw prices plunge more than 20 percent over four straight trading sessions.

Having opened only 0.53 percent higher, the volatile Shanghai Composite Index trimmed morning losses of nearly 4 percent to soar as much as 4.3 percent at one point during the afternoon session - sitting a touch above the psychologically important 3,000 level. However, it fell into negative territory in the final hour before closing at 2,927.29, in the red for the fifth day in a row.

This roller coaster ride came despite the People's Bank of China firing a double-barreled easing shot late on Tuesday, cutting its benchmark interest rates and lowering the reserve requirement ratio for banks - in effect injecting liquidity.