China shares extended losses in early Monday trade, with Chinese banks leading the downward spiral after official news reports over the weekend suggested Beijing will crack down on shadow banking, blamed for the cash crunch in the mainland.
By 0203 GMT, the CSI300 of the leading Shanghai and Shenzhen listings was down 3.3 percent at 2,240.7 points, its lowest intra-day level since mid-December. A break below this level, a key chart support, may point to further losses.
The Shanghai Composite Index was down 2.3 percent.
There is ample liquidity in China and the latest spike in money market rates was a result of market distortions caused by widespread speculative trading and shadow financing, state news agency Xinhua said in a commentary on Sunday.