Beijing: Chinese benchmark stock index witnessed another bout of selling on Monday tumbling more than 8 per cent, registering its lowest level since February 2007 amid concerns over economic health and fears of an end to Beijing's inclination toward looser monetary policies.

The Shanghai Composite Index plunged 8.48 per cent to close at 3,725.56, after hitting a low of 3,720.44, the lowest level since early 2007.The Hang Sang index also fell 3.188 per cent to be at 24,330.46.

It's the biggest one-day drop in more than eight years in China, as a government-triggered rebound petered out amid profit-taking, concerns over economic health and fears of Beijing's inclination toward tighter monetary policies.

It wasn't immediately clear what caused such a sharp tumble in the afternoon session. At midday, the two indexes were down about 2.5 percent.

"The recent rebound had been swift and strong, so there's need for a technical correction," said Yang Hai, strategist at Kaiiyuan Securities.
He said the trigger was "a sluggish U.S. market amid stronger expectations of a Fed rate rise in the fourth quarter.

That, coupled with China's rising pork prices, fuels concerns that China would refrain from loosening monetary policies further."

Early in the day, Yang Delong, fund manager at China Southern Asset Management wrote clients: "A rapid, post-rout rebound in mainland 'A' shares has ended, and the market has entered a stage of fluctuations, with investor sentiment increasingly unsteady."

Investor sentiment was soured by official data released on Monday showing that profit at China's industrial firms dropped 0.3 percent in June from a year earlier, reversing a 0.6 percent rise in May.

This adds to pressure on an economy that is struggling to regain momentum, after data on Friday showed that China's factory sector contracted the most in 15 months in July as shrinking orders depressed output.

Stocks fell across the board, with 2,247 companies falling, leaving only 77 gainers.

Index heavyweights, including China Unicom,/sBank of Communications and PetroChina/sslumped to their daily downward limit of 10 percent.