China to keep buying stocks in bid to quell market panic

China will unleash more funds to stabilise its sharemarket, state media reported on Monday, after Shanghai stocks saw their biggest daily fall for more than eight years.

State-backed China Securities Finance Corporation (CSFC) will continue to buy stocks, Xinhua reported, citing a spokesman for the China Securities Regulatory Commission Zhang Xiaojun.

The move was made to dispel "rumors that the national margin trading service provider has backed off from stabilizing the stock market," Xinhua said.

Chinese shares slumped more than eight percent on Monday, their biggest fall in a single session since February 2007, after weak economic data revived fears about the health of the world's second-largest economy.

Investors were also unsettled by reports the CSFC had started to return funds it borrowed from commercial banks to stabilise the stock market ahead of schedule, sparking fears Beijing's commitment to the market may be flagging.

Chinese authorities have unleashed an unprecedented government rescue plan to prop up equities in recent weeks that has included a police crackdown on short-selling and a six-month ban on big shareholders selling stocks.