(MENAFN- AFP) Shanghai stocks slumped 8.48 percent on Monday, defying government efforts to prop up the market, on worries the world's second largest economy is heading for a sharp slowdown, dealers said.
The Shanghai Composite Index closed down 345.35 points to 3,725.56 on turnover of 721.3 billion yuan ($117.9 billion).
The Shenzhen Composite Index, which tracks stocks on China's second exchange, slid 7.00 percent, or 162.62 points, to 2,160.09 on turnover of 667.7 billion yuan.
The falls came as economic data caused sentiment to turn, despite government efforts to prop up the stock market following a rout that began last month, dealers said.
"Investors are not confident that the bull market will return any time soon," Jimmy Zuo, a trader at Guosen Securities, told Bloomberg News.
"People want to pocket profits after the benchmark index rose past the 4,000 mark."
On Monday, the government said that profits of major industrial firms slipped 0.3 percent year-on-year in June to 588.57 billion yuan.
On Friday, the preliminary reading of Caixin's Purchasing Managers' Index (PMI) -- an independent survey of manufacturing activity -- came in at 48.2 for July, the weakest reading since 48.1 in April 2014.
Officials have unveiled a slew of measures, including a police crackdown on short-selling and a ban on big shareholders selling stock for six months, to avert a slump which began in mid-June.
But Shanghai stocks sank 1.29 percent on Friday, ending a six-day rally, after the PMI figures.
Despite official denials, investors are also worried over whether the government will exit the market by removing the support funds which have propped up prices.
"The rise during the past two to three weeks was too big, so the market needs to correct itself," Zhang Qi, an analyst from Haitong Securities, told AFP.
"And there is also uncertainty about how the government support measures will exit the market," he said. Nonetheless he expects the Shanghai index to continue to move around the 4,000-point level.
China's securities regulator last week denied studying an exit plan for market-stabilisation funds.
The state-backed China Securities Finance Corp., tasked with restoring market stability, also denied reducing its holdings in listed companies, state media reported on Wednesday.
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