Global stock markets steadied Tuesday after heavy declines, as Chinese shares bounced back from their lows in another roller coaster session.

In Europe, the Stoxx Europe 600 was up 0.5% in early trade. The index had fallen 2.2% on Monday as the biggest one-day fall in eight years in the Shanghai Composite Index spilled over into global markets. Shanghai shares fell a further 5% on Tuesday, before rebounding to trade around 1.5% lower.

The rout in China has fanned fears over slowing growth in the world's second-largest economy, stalling a rally in Europe that began after Greece and its creditors agreed to negotiate a new bailout. Investors are also looking ahead to Wednesday's update from the Federal Reserve for clues on the timing of an interest rate rise that some expect as soon as September.

The combination of a potential escalation of the crisis in Greece with problems in China and an imminent Fed rate rise is a worrying one for investors, said Rabobank analyst Michael Every.

"We appear to still have all three issues on the horizon," he said.

Talks to complete a bailout program between Greece and its creditors will start Tuesday, nearly a week later than planned.

In currency markets, the euro fell 0.3% against the dollar to $1.1059 after a sharp rise on Monday.

In commodities, oil prices were trading near four-month lows after being hit by the turmoil in China. Brent crude was 1.2% lower at $52.82 a barrel.

Gold fell 0.1% to $1,095.00 a troy ounce.

Write to Tommy Stubbington at tommy.stubbington@wsj.com

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