The Shanghai Composite fell 0.3% to close at 3,287.71 points, although it had opened more than 3% lower.
Hong Kong’s Hang Seng index also fluctuated through the day, and ended 0.7% lower at 21,188.72.
Trading in Shanghai was suspended on January 4 under a new rule designed to limit dramatic falls in markets.
However, regulators said on January 5 they may restrict stock sales to stem falls.
The China Securities Regulatory Commission said it would consider restricting the proportion of shares that major shareholders could sell during a given period of time.
The Chinese central bank also injected an unexpected 130 billion yuan ($19.94 billion) into the market to keep borrowing costs down – in a move to reassure retail investors.
The measures, however, did little to prevent Chinese shares from falling in afternoon trade.
Analysts said investors were waiting to see if Beijing could stem the latest selling in Chinese stocks and whether more measures would be introduced.
The new “circuit breaker” rule that suspended trading nationwide for the first time on January 4 was created after sharp falls last summer and was meant to curb market volatility in China.
Yesterday’s 7% fall in China spooked global markets.
Overnight, US benchmark indexes lost up to 2% as concerns grew that the dive in the Chinese stocks was the start of another volatile period after last summer’s dramatic market rout.
Escalating tensions in the Middle East, which affected oil prices, also dented investors’ confidence.
Oil prices were flat after rising as much as 4% on Monday following the dispute between Saudi Arabia and Iran.
Japan’s Nikkei 225 index ended 0.4% lower at 18,374.00, while Australia’s S&P/ASX 200 closed down 1.6% at 5,184.43.
Only South Korean shares bucked the downward trend after a senior finance ministry official said the government would take action to stabilize the market if needed, following January 4 steep plunge. The Kospi finished up 0.6% at 1,930.53.
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