SHANGHAI (Reuters) - China stocks slumped about 4 percent on Tuesday, touching eight-month lows, as investors dumped shares after a grim "Black Monday" that battered global markets but failed to prompt fresh rescue measures from Beijing.
After opening 6.4 percent lower, the Shanghai Composite Index (SSEC) trimmed some losses to end the morning down 4.3 percent at 3,071.06 points.
The Shanghai index is now just a touch above 3,000 points, seen by many as a key psychological support level, a breach of which could trigger fresh panic selling.
The blue-chip CSI300 index (CSI300) fell 3.9 percent, to 3,147.76 points, also paring some of its losses when trading opened.
The flagship indexes, which have lost more than 16 percent in August, are heading for their worst monthly performance in six years, barring a sharp rebound in the final days.
Hong Kong stocks fared better than mainland ones on Tuesday.
The Hang Seng index (HSI) reversed early losses and was up 1.6 percent at lunch time, to 21,595.74 points.
The Hong Kong China Enterprises Index (HSCE), which tracks big Chinese companies listed in the city, gained 0.5 percent, to 9,646.01.
On Monday, China stocks fell nearly 9 percent in the worst trading session since 2007, triggering a ferocious global market rout amid deepening concerns over the state of the Chinese economy.
But no policy or emergency rescue measures were announced by Beijing overnight. The absence of any sentiment-soothing editorials in Tuesday's state media strengthened views that the Chinese government now has little will to prop up share prices.
"Global investors are cannibalising each other. Calling it a market disaster is not an overstatement," said Zhou Lin, an analyst at Huatai Securities.
"The mood of panic is dominating the market... and I don't see any signs of meaningful government intervention."
In a sign of rapidly shrinking risk appetites, outstanding margin loans - money investors borrow to buy stocks - fell for the fifth day in a row in Shanghai.
They totalled 795.9 billion yuan ($124.16 billion) on Monday, or 46 percent below the June 18 peak of 1.48 trillion yuan.
"Stocks in the U.S. and Europe are all slumping, so it's not just a China issue. It's the start of a global financial crisis," said Jerry Xu, a 35-year-old retail investor in Shanghai.
Striking a different note, he said: "From another perspective, it shows China's huge global clout."
Banking <.CSI300BI> is the only sector that moved into the positive territory by midday, amid signs that lower valuation of lenders - many trade below their net asset value - were attracting bargain hunters.
Tech
In Hong Kong, most sectors rose. Among the main ones, only energy (HSCIE) and materials (HSCIM) were in the red.