China stocks tumbled to four-month lows on Wednesday as panicky investors dumped shares across the board, even as the government tried to unveil supportive measures throughout the day session to stop the plunge.

To insulate themselves from the meltdown, more than 500 China-listed firms announced trading halts before the market opened, bringing the total number to around 1,300, almost half of China's roughly 2,800 listed firms.

"I've never seen this kind of slump before. I don't think anyone has," said Du Changchun, analyst at Northeast Securities.

"Liquidity is totally depleted."

The CSI300 index of the largest listed companies in Shanghai and Shenzhen fell 6.8 per cent, to 3,663.04, while the Shanghai Composite Index lost 5.9 per cent, to 3,507.19 points.

In an unprecedented sign of desperation, all of China's three futures index products for July delivery slumped by their 10 per cent daily limit, meaning investors are extremely bearish on all type of stocks - small, mid, and big cap.

Most blue chips, the target of government's intensified purchases, saw previous session's gains wiped out. Some analysts attributed the sell-off to share suspensions by a huge number of companies.

"Given the suspension of stocks comprising a large part of the onshore markets, there are fewer stocks available to sell for those investors needing to meet their margin call requirements," said John Ford, chief investment officer for Asia Pacific at Fidelity Worldwide Investment.

"This ...is in large part responsible for the current liquidity squeeze."

Stocks fell across the board, with only 83 stocks rising, and 1,439 falling.

Even Shanghai's top blue chip exchange-traded funds , the target of purchases by a stabilization fund set up by Chinese brokerages, and state investor Central Huijin, also fell sharply.

In an unusual manner, various Chinese government agencies published a series of measures throughout the trading session, including urging major shareholders and top executives of listed companies to buy their own shares, and allowing insurers to buy more blue chips.

Bank of America Merrill Lynch said China's deleveraging and margin calls could be far from over, with no bottom seen until the government becomes buyer of last resort.

Panic settlement

The securities regulator said the tumbling stock market in the world's second-biggest economy was in the grip of "panic sentiment" as investors ignored a battery of support measures from Beijing.

Amid signs of the market freezing up as companies scrambled to have trading in their shares suspended, the People's Bank of China said it was watching closely and would guard against systemic regional financial risks.

The panic in mainland markets is rippling across the border, knocking the Hong Kong market down more than 4 per cent. Overseas-listed Chinese companies also slumped.

No bottom

A slew of government support measures, including direct purchases of blue chips, a central bank pledge of liquidity support, and a halt in initial public offerings, has not been able to stem the slide.

Souring Boom

The plunge in China's previously booming stock markets, which had more than doubled in the year to mid-June, is a major headache for President Xi Jinping and China's top leaders, who are already struggling to avert a sharper economic slowdown.

Beijing's interventionist response has also raised questions about its ability to enact the market liberalisation steps that are a centrepiece of its economic reform agenda.

China has orchestrated brokerages and fund managers to promise to buy at least 120 billion yuan ($19 billion) of stocks, helped by a state-backed margin finance company which the central bank pledged on Wednesday to provide sufficient liquidity.

Unlike other major stock markets, which are dominated by professional money managers, retail investors account for around 85 per cent of China trade, which exacerbates volatility. "It's uncommon to see so many shares posting consecutive daily limit falls, and the index futures swinging so wildly," said Wang Feng, CEO and founder of hedge fund firm Alpha Squared Capital Co and a former Wall Street trader.

"It's a stampede. And the problem of the market is that all the players move in the same direction, and are too emotional."

A surprise interest-rate cut by the central bank at the end of June, relaxations in margin trading and other "stability measures" did little to calm investors.

The barrage of official commentary and new support measures continued on Wednesday.

Deng Ge, a spokesman for the China Securities Regulatory Commission said in remarks posted on its official channel on Weibo, China's version of Twitter, that there had been a big increase in "irrational selling" of stocks.

China's insurance regulator said "qualified" insurers could increase their ratio of equity assets to 40 per cent from 30 per cent by buying blue-chip stocks.

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