Minutes after China’s stock trading tumbled by 7% in the early hours of Monday morning, stock trading was halted to stop the retreat.

Data compiled by Bloomberg said trading was halted at about 1:34 p.m. local time on Monday after the CSI 300 Index dropped 7 percent.

An earlier 15-minute suspension at the 5 percent level failed to stop the retreat, with shares extending losses as soon as the market re-opened. Traders said the halts took effect as anticipated without any major technical problems, Bloomberg reported.

Stocks fell as manufacturing contracted for a fifth straight month and investors anticipated the end of a ban on share sales by major stakeholders.

Under the mechanism which only became effective Monday, a move of 5 percent in the CSI 300 triggers a 15-minute halt for stocks, options and index futures, while a move of 7 percent close the market for the rest of the day. The CSI 300 of companies listed in Shanghai and Shenzhen fell as much as 7.02 percent before trading was suspended.

"The mechanism is merely a tool and it won't help the market find its true value. With or without the system, the market will continue to drop further if selling pressures piles up," Shen Zhengyang, an analyst at Northeast Securities, told AFP.

The Shanghai Composite tumbled 6.85 percent to 3296.66.  The CSI 300 briefly plummeted 7.02 percent; when that index rises or falls 7 percent, a trading halt in China's markets is triggered for the rest of the session, CNBC reported.

According to the BBC, the technology-heavy Shenzhen Composite was the worst performer and fell by more than 8%.

Dow futures are now down over 150 points from NYE close, Gold and Treasuries are bid, and offshore Yuan has plunged most since the August devaluation.