Media playback is unsupported on your device Media caption Carrie Gracie speaks to people in China about their economic concerns

Chinese shares have closed lower despite a fresh rate cut by the central bank.

The mainland's benchmark Shanghai Composite fell 1.27% to 2,927.29, after veering in and out of negative territory.

It had fallen about 16% this week, rocking global markets.

On Tuesday, China's central bank cut its key lending rate by 0.25 percentage points to 4.6% in a bid to calm stock markets after the past days' turmoil.

The dramatic losses and volatility in China have shattered investor confidence and led to sharp falls in Asia and the US over the past days.

European markets were down about 0.4% by lunchtime, after rallying on Tuesday.

The interest rate cut was the fifth by the People's Bank of China since November last year.

A rate cut will make it cheaper for banks to borrow from the central bank and will in turn make it easier for businesses and private people to borrow money from those banks.

China's economic slowdown 282% China's debt to GDP ratio $28 trillion Debt has quadrupled since 2007 0.25% cut in key lending rate

5th interest rate cut since November

7% China's growth target for 2015 Getty

Analysis: Robert Peston, BBC business editor

In some ways I thought yesterday's events on markets were if anything more disturbing than Monday's global rout.

Because if share-price gains could not hold after the significant monetary easing by China's central bank, then mistrust about the true state of the world's second largest economy (actually the number-one economy on the purchasing-power-parity measure of GDP) has become very pronounced indeed.

And another thing, the Chinese interest rate cuts will exacerbate the phenomenon that has caused so much stress in so many different global markets, from commodities, to foreign exchange, to stocks and bond - the fall in the Chinese currency, the RMB, since it was allowed by Beijing to float more freely on 11 August.

Read more from our experts:

Robert Peston: China's woes and a still flawed global economy

Duncan Weldon: What next for the global economy after China market woes?

Andrew Walker: How the China share slump affects the rest of the world

Karishma Vaswani: China counts cost of Black Monday

Media playback is unsupported on your device Media caption What can the past tell us about whether it is worth hanging on to stocks during storms such as Black Monday?

The BBC's Celia Hatton in Beijing explains that the move is aimed at a long-term effect on the growth of the Chinese economy, rather than at having an immediate impact on investors.

"They've already said they are not going to intervene on a day-to-day basis in the stock market, but they are going to focus their attention on growing the real economy in the long term."

"They hope that this will convince investors that the Chinese economy might be slowing down, but is not in for a hard landing, and that this will over time convince investors and stabilise the market," our correspondent said.

Hong Kong's Hang Seng index followed Shanghai's lead for most of the day, closing 1.5% lower at 21,080.39 points.

Given China's central role in world trade, a slowdown in the world's second-largest economy would be likely to reverberate around the globe.

Read more: The six Cs of the China stock slump

The stocks fall in facial expressions

Optimism elsewhere

Media playback is unsupported on your device Media caption Glossary of China finance slowdown

Elsewhere in Asia, the region's largest index, Japan's Nikkei 225 finished 3.2% higher on Wednesday at 18,376.83 points.

The Nikkei's gains come after a painful week for the Tokyo index, which had shed more than 8% in the past two sessions.

South Korea's Kospi index was also in positive territory, closing 2.6% higher at 1,894.29 points, while in Australia, the S&P/ASX 200 finished 0.7% up at 5,172.80.

Overnight, European and US markets saw another session of volatile trading.