A woman looks at prices of shares at a stock brokerage in Fuyang, East China's Anhui Province on Monday. Photo: IC

China's stock markets continued to slide on Monday, even though the country's top securities watchdog has rolled out a series of measures to restore confidence.

The benchmark Shanghai Composite Index closed down 1.11 percent at 3,622.91 points Monday, and has fallen by 10 percent over the last week. The Shenzhen Component Index nudged down by 1.72 percent, closing at 12,161.58 points.

The daily trading volume on the two bourses reached 848.3 billion yuan ($136.7 billion) in total on Monday, well below the level of over 2 trillion yuan in late May.

In its latest crackdown on price man­ipulation and malicious short selling, the China Securities Regulatory Commission (CSRC) is targeting dubious trading practices.

The CSRC will strengthen its supervision of program trading, which is sometimes used for market manipulation, according to a report on Monday by Shanghai Securities News.

An unnamed official from the CSRC was quoted by the country's four major securities newspapers on Monday as saying that some individual and institutional accounts have conducted abnormal trading activities, influencing investors and causing fluctuations in share prices, even of blue-chip stocks such as PetroChina and Sinopec.

On Thursday, the Shanghai and Shenzhen bourses suspended trading by 24 securities accounts. And trading by another four accounts on the Shanghai Stock Exchange was halted on Saturday, while the Shenzhen Stock Exchange restricted trading by six more, information from the two bourses showed.

An account belonging to the securities arm of US-based financial institution Citadel on the Shenzhen bourse was among those that were suspended.

An unidentified source close to the matter was quoted by Caixin Weekly on Monday as saying that the CSRC is still investigating malicious short selling in the A-share market.

The securities authorities could not be reached for comment by press time.

In a statement released late on Monday, the Shanghai and Shenzhen bourses unveiled a revision to rules for short selling, stipulating that investors who borrow shares from brokers can only repay the loan with shares purchased from the next trading day on. The repayment was previously not subject to a time frame requirement.

The CSRC's moves are necessary and can stabilize the stock market, but are unlikely to boost the market, Xu Gao, chief economist at China Everbright Securities Co, told the Global Times on Monday.

"The continuous drop indicates insufficient confidence in the market, and also reflects current economic performance," said Xu, noting that China's economy still faces downward pressure.

China's official Purchasing Managers' Index, a key economic indicator, stood at 50.0 for July, down 0.2 points from the previous month. A reading above 50 indicates growth, while a reading below 50 points to contraction.

Everbright Securities forecast that the Consumer Price Index for July would reach 1.6 percent year-on-year, a modest rise from June's 1.4 percent, but the Producer Price Index is expected to have declined by 5 percent in July from a year earlier.

The tepid economy will influence the stock market to some extent, and investors should be ready for volatility, Dong Dengxin, director of the Financial Securities Institute at Wuhan University of Science and Technology, told the Global Times Monday.

On Monday, a report based on a survey of 803 A-share market investors by Shanghai-based SWS Research Co showed that 56 percent of respondents thought that the Shanghai Component Index would continue to fall in the third quarter. 

"However, there is not likely to be any dramatic drop in the stock market, as State-backed institutions and government authorities are pumping up efforts to bring back stability to the market," said Dong.

China Securities Finance Corp (CSFC), the State-owned margin lender that plays the main role in injecting funds into the country's stock market, plans to pour 200 billion yuan into the stock market in August, Shanghai Securities News reported on Monday.

However, Dong said that CSFC's capital injection may not have a big effect in stimulating the stock market, as investors' confidence remains low.