Chinese shares plunged the most in eight months Monday on government moves to cool surging housing prices.
The benchmark Shanghai Composite Index tumbled 150 points, or 4.8 percent, to close at 2,980.30, the biggest single-day fall since Aug 17, 2009. The Shenzhen Composite Index for China's smaller second exchange dropped 4.4 percent to 1,175.36.
China's cabinet announced measures over the weekend to further crack down on rising housing prices, including restrictions on loans for third-home purchases.
Real estate prices have risen for months despite government vows to curb speculative property investments.
"This time, it seems that the government determination to cool home prices is bigger than before," said Mao Nan, a strategist for Oriental Securities in Shanghai.
Mao said more investors turned pessimistic because the tougher policies might reflect a government push to slow down an overheating economy rather than just property prices. More tightening policies might trim corporate earnings, Mao said.
Real estate shares set the tone in the market. Poly Real Estate Group, China's second-biggest property developer, tanked 9.3 percent to 16.92 yuan, while rival China Vanke Ltd. plummeted 8.2 percent to 8.3 yuan.
Bank heavyweights also lost ground. Industrial & Commercial Bank of China Ltd., China's biggest commercial lender, slumped 4.9 percent to 4.66 yuan. China Construction Bank Ltd. lost 4 percent to 5.33 yuan. while Bank of China Ltd. dropped 3.6 percent to 4.05 yuan.
Steel producers were dampened by rumors the country's iron ore inventory can last only to June while price talks with international suppliers were in a deadlock. Angang Steel Company Ltd. sank 8.1 percent to 10.28 yuan, while Baoshan Iron & Steel Co., China's biggest steel producer, gave up 6.7 percent to 7.13 yuan.
In currency markets, the yuan weakened to 6.8262 to the U.S. dollar, down from Friday's close of 6.8259.
