Chinese shares plummeted at midday Monday following the United States' loss of its top-tier AAA credit rating from Standard & Poor's.

The benchmark Shanghai Composite Index tumbled 3.68 percent to 2,529.88. The Shenzhen Component Index slip 2.97 percent to 11,354.42.

The shares opened 1.03 percent lower on Monday morning and hit a year low of 2,497.92 during the morning trade as investors began panic selling.

The financial crisis seemed far from being coming to an end and the negative effect of the U.S. fiscal stimulus polices are emerging, said an analyst with Guotai Jun'an Securities.

Rating agency Standard & Poor's on Friday cut the U.S. debt rating to AA+ with a negative outlook for the first time.

Official figures show that the U.S. economy slowed to an annual growth rate of 1.3 percent during the second quarter of the year, far short of market expectations of 1.7 percent. Meanwhile, the nation's manufacturing purchasing managers' index for July fell to 50.9 percent with the new orders index plunging to a six-month low.

The unencouraging economic data stoked concerns about the strength of the U.S. economic recovery.

Other Asian markets also dropped in reaction to the downgrading. Hong Kong's Hang Seng tumbled 4 percent to 20,109.49 and Japan's Nikkei 225 stock average was down 1.3 percent to 9,178.03 by its midday close.