SEOUL: China's Shanghai stock index plunged nearly 7 percent on Monday and trading in Chinese shares was halted for the remainder of the day after weak manufacturing data and Middle East tensions weighed on Asian markets.
The Shanghai Composite Index dived 6.9 percent to 3,296.66 on Monday, the first trading day of 2016. The index was at the lowest level in nearly three months.
The official Xinhua News Agency said China halted trading on the Shanghai and Shenzhen stock markets to stop steeper falls. It was the first time China used the "circuit breaker" mechanism it announced late last year following a rout in Chinese stocks.
Weak manufacturing data was behind the sell-off Monday along with Middle East tensions, which pushed up oil prices.
The Caixin/Markit index of Chinese manufacturing, which is based on a survey of factory purchasing managers, fell to 48.2 in December from 48.6 the previous month, marking contraction for the 10th straight month. It was the latest sign of the headwinds facing China's economy that add to a downbeat outlook for Asian exporters.
Saudi Arabia said Sunday it is severing diplomatic relations with Iran, a development that could potentially threaten oil supply. The world's largest oil supplier executed a prominent Shiite cleric that prompted protesters to set fire to the Saudi Embassy in Tehran and Iran's top leader to criticize Saudi Arabia.
Other stock markets in the region also started the new year on a weaker note. Japan's Nikkei 225 tumbled more than 3 percent and Hong Kong's Hang Seng retreated about 3 percent. South Korea's Kospi closed 2.2 percent lower.