Benchmark index has plummeted by 20% in two weeks

Easing policies over the weekend by Chinese monetary authorities failed to prop up falling stock markets, with the benchmark index on Monday further extending its 20 percent loss of the past two weeks.

The Shanghai Composite Index tumbled on Monday in volatile trading, finishing down by 3.3 percent to close at 4,053.03 points.

Market volatility pushed the index down as much as 7.6 percent in afternoon trading after a gain of 2.5 percent in the morning. Part of the loss was recouped later by the rise of large-cap financial and energy companies.

The market recorded the biggest intraday point swing on Monday since 1992, Bloomberg reported. The average intraday move of the benchmark index in June has been 3.8 percent, more than four times that of the S&P500.

Analysts said the continued decline was largely caused by the forced liquidation of highly leveraged trading accounts that failed to meet margin calls after the dramatic sell-off on Friday.

Market sentiment had also been depressed by the latest wave of initial public offerings, as the securities regulator has accelerated the approval process to clear the IPO pipeline before switching to a new registration-based system that would not require regulatory approval for listing.

"Traders will likely seize any possible technical reprieve to exit their positions, which will continue to induce volatility," said HongHao, the chief strategist at investment bank BOCOM International Holdings in Hong Kong.

Hong said that the market will only stabilize when the "weak hands" with high leverage are washed out.

To soothe market concerns, China Securities Finance Corp, a State-owned financial company offering margin loan financing services, said on Monday that the risk of margin trading, which allows investors to borrow money to purchase stocks, remains controllable.