International financial markets appear to be calming down after a period of high volatility earlier this week, Japan's senior international financial diplomat said Thursday. Equity markets around the world fell sharply Tuesday, prompted initially by a collapse in Chinese share prices, and given further momentum by signs of a downturn in the U.S. manufacturing sector. However, many markets regained ground Wednesday, and Hiroshi Watanabe, Japan's Vice Finance Minister for International Affairs, said at a press conference the turmoil appears to have ended. "Today the market is a little bit calmer," he said. "I don't see any big turmoil remaining." Watanabe said he believed stock market weakness was a reflection of recent market worries about China. "I think the Hong Kong three-day consecutive decline (in stocks) is somewhat a sign of caution toward the Chinese economy, so in that sense we have to pay much more interest to that situation. But it is not a globalized theme," he said. Rumors about possible Chinese government changes to capital controls and monetary policy had spurred those concerns, he added. Watanabe said he didn't think unwinding of the yen carry trade had been a main driver of recent stock market turmoil. "I don't think carry trade unwinding has had a serious (market) impact in the last couple of days...The effect has been limited," he said. Watanabe said he was confident most foreign exchange positions were unlikely to be altered quickly. In the larger part, investments abroad by Japanese institutions and individuals were long-term in nature, as were most positions held by foreigners, he said. Where there was concern was in speculative carry trades, but he reiterated his earlier assertion that the size of this phenomenon was "somewhat limited." Earlier Thursday, Watanabe had said while the size of speculative yen carry trades was hard to measure accurately, it was more in the region of tens of trillions of yen, rather than some estimates of $1 trillion. Watanabe said an unwinding of carry trades could come "at any time," but said he saw no reason for a rapid unwinding at the present time. He also repeated the words of the latest Group of Seven finance ministers' communique, saying "markets should recognize there is a two-way risk in the carry trade." Watanabe added "disorderly movements in foreign exchange markets are counterproductive," and currency rates "should reflect economic fundamentals." But he reaffirmed he wouldn't comment on daily movements in foreign-exchange rates.