The Shanghai market has slumped more than 40 percent from its peak since mid-October.

On the weekend, speculation was rife that the government may step in to offer encouraging policies, such as a cut in stamp duty, to restore investors' confidence.

Even Premier Wen Jiabao's pledge on Sunday that the government will strive to promote a stable and sound development of the stock markets did not help arrest the plunges. Some analysts even predicted the barometer would fall below 3,000 points in the absence of concrete measures.

Elsewhere, China Merchants Bank Co, lost 1.49 percent to 31.69 yuan. The bank said it was not a good time to expand in the US through acquisitions or alliances because the subprime crisis may not have ended, Chief Executive Officer Ma Weihua, said in an interview.

Gree Electric Appliances, China's largest maker of home air-conditioners, tumbled the 10 percent daily cap, to 40.40 yuan. About eight percent of the company's total stake, or 66 million shares, will become tradable tomorrow, when a trading lock-up period expires, said Gree in a statement today.

But Ping An Insurance (Group) Co, China's second-largest insurer, rose 0.83 percent to close at 53.35 yuan. The insurer said it "ultimately" wants to obtain a seven percent stake in Fortis, the Belgian-Dutch company said. Ping An currently owns 4.99 percent of Fortis. Fortis intends to explore "possible means" to that end, the company said in its annual report posted on its Website.