China’s manufacturing sector expanded for a sixth straight month in August to a 16-month high according to two indices published on Tuesday, an indication that economic recovery has continued.

Fears that government curbs on bank lending could stall the recovery have led to high volatility in the Shanghai stock market. Chinese shares fell 6.7 per cent on Monday in their biggest fall in more than a year, though the index rose 0.6 per cent to 2,683.72 on Tuesday.