China stocks open down but quickly recover

China's main stock index opened lower on Wednesday but recovered quickly and moved into positive territory as heavily weighted financial blue chips climbed.

The benchmark Shanghai Composite Index (.SSEC: Quote, Profile, Research) opened down 1.34 percent, but after five minutes stood 1.18 percent higher at 2,804.454 points.

On Tuesday the market plunged 8.84 percent, its biggest fall in a decade, in a sell-off that jolted global financial markets.

Analysts said Chinese investors remained nervous after Tuesday's rout but recently created funds had entered the market to accumulate shares for long-term investment.

Officials denied various rumors that fueled Tuesday's tumble, including talk that China might impose a stock capital gains tax and that the head of the securities regulator might step down.

In addition, investors believe the government, which wants to list big state firms on the market this year, will not permit a collapse that could endanger those plans, traders said.

Many see good technical support for the index at the February low of 2,541, from which it bounced sharply early in the month.

"The situation is not too bad. The market should stay in a range of 2,500 to 3,000 for a while," said Zhang Qi, analyst at Haitong Securities, adding that Tuesday's drop was probably not the start of a bear market.