HONG KONG — After several weeks of relative calm, tumult returned to China's stock markets Monday, casting doubt on the government's measures to support share prices.
The main Shanghai share index plunged 8.5 percent Monday, its steepest one-day drop in eight years. Shenzhen's main index fell 7 percent.
Even stocks that had been strong performers in the recent, government-backed rebound were hit hard. State-owned PetroChina, the country's biggest oil producer, fell 9.6 percent Monday. Government-backed brokerages, which had in recent months raised billions of dollars by selling new shares, also suffered, with Citic Securities and Haitong Securities falling by the limit of 10 percent.
"The return of debacle!" China's official Xinhua news agency said Monday on its Twitter account, noting that in the sell-off, about two-thirds of all mainland-listed stocks fell by the 10 percent daily limit.
Fallout from the plunge in China's stock market was felt in the United States. The Dow Jones Industrial Average lost 127.94 points, or 0.7 percent, to close at 17,440.59. The Standard & Poor's 500 index lost 12.01 points, or 0.6 percent, to 2,067.64, and the Nasdaq composite lost 48.85 points, or 1 percent, to 5,039.78.
It was the fifth straight loss for the U.S. market.
For more than a year, China's stock market soared, as investors aggressively borrowed money to buy shares. At their peak in June, the total market value of China's publicly traded stocks briefly surpassed $10 trillion, second in size only to the United States. Tens of millions of ordinary investors opened new accounts to try to cash in on the rally.
The markets started to turn in late June, with investors growing concerned about a potential bubble. Shares lost more than $3 trillion in a matter of weeks. Worried about the fallout, the government moved aggressively to prop up stocks with a spate of measures. Authorities suspended initial public offerings, introduced a $120 billion market stabilization fund backed by the central bank, and encouraged executives to buy company shares. The moves helped restore confidence in the market. Shares, particularly in big state-backed companies, rebounded modestly.
With share prices now falling again, investors may be forced to unwind some of these so-called margin trades to repay what they borrowed.