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It was a "bloody Monday" for Chinese stock markets as shares once again nosedived in the sharpest decline since 2007 over fears of a hard landing for the world's second largest economy.
"China stocks saw the sharpest fall since 2007," state-run Xinhua news agency reported.
The benchmark Shanghai Composite Index dropping 8.49 per cent to close at 3,209.91 points. The smaller Shenzhen Component Index fell 7.83 per cent ending at 10,970.29 points.
The CSI 300 also declined to end at 3,271.89, down 8.85 per cent or 317.65 points.
The ChiNext Index, tracking China's Nasdaq-style board of growth enterprises, lost 8.08 per cent to end at 2,152.61 points. Nearly 2,200 shares tumbled by the daily limit of 10 per cent, Xinhua report said.
The stocks closed at their lowest as a wave of risk-off selling pummelled the market with only about 100 stocks listed in Shanghai still trading late as the other 993 stocks listed on the benchmark index either halted trading voluntarily or were forced to do so after it fell by the daily 10 per cent limit, a report in the South China Morning Post said.
Fears about the sputtering Chinese economy have spread like wildfire in global stocks, leading to a vicious round of risk aversion selling, the Post report said.
The decision by the Chinese government to permit its $547 billion pension fund, the biggest in the world, to be invested in the stock market despite the June 12 market crash wiping out about $4 trillion capital has not helped.
China's cabinet has published the final guideline on investment for the country's massive pension fund, effectively opening the gate for more diversified and riskier products.
"The official PMI to be released on September 1 will be closely watched by the market," said ANZ in a note to clients.
"Activities remain sluggish while the risk of deflation has not abated with PPI falling for 41 consecutive months. We expect a RRR cut in Q3 followed by an interest rate cut".
Investors rushed to dump shares amid fears that hard landing risks in China are rising after a slew of policy incentives failed to bolster economic performance, Post reported.
Shanghai's gains for the year have been erased and the index is now in negative territory in 2015.
Among the 993 that halted trading, 126 firms announced trading halt spontaneously while the rest fell by the single day trading limit. The situation is also similar in Shenzhen.
Chinese shares have been in near free-fall since scaling a 7-year peak on June 12.
Warnings against what it called "malicious short selling" by the government and billions of yuan in stimulus measures announced by Beijing to prop up the market has failed to stem the rout.
The three-week fall of both Shanghai and Shenzhen since June 12 erased nearly $4 trillion in value from both markets. The morning's selling spree is estimated to have erased another $1 trillion of market value, the Post said.
In the June-July crash over 20 million small investors deserted the stock markets despite a series of steps announced by the government to infuse confidence in the markets, which staged a recovery of sorts amid infusion of capital by state-run financial institutions.
China also devalued its currency by about four per cent amid the economic slowdown as GDP hovered around seven per cent. The move was largely interpreted as an attempt to boost sagging exports.
An IMF forecast of the Chinese economy said it will grow at 6.8 per cent which is lower than the 7 per cent target set by the government.
In its recent World Economic Outlook update, the IMF forecast the Chinese economy to grow 6.3 per cent in 2016 and 6 per cent for 2017.