“Unable to create new image” error in wordpress dashboard image editor

My server is nginx and wordpress version is 3.8.1. I can upload images but when I try to edit the image (scale, crop) it gives below error and doesn’t show picture.

I have tried with 400kb to 1mb picture both has same problem.

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I found on internet that it can happen because of GD library is not available. I have installed GD library but still getting same error. Also tried this solution but no luck.

Can anyone help me?

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