Chinese shares plunged more than seven percent today amid panic selling over worries of a possible US economic recession.

The benchmark Shanghai Composite Index, which covers both A and B shares, tumbled 354.68 points, or 7.22 percent, to 4,559.75. It was the largest percentage points decline in seven and a half months.

The index plummeted as much as 8-plus percent in late afternoon trading.

The Shenzhen Component Index finished down 1,215.08 points, or 7.06 percent, at 15,995.85.

Losses led gains by 780 to 17 in Shanghai and 599 to 8 in Shenzhen. Aggregate turnover expanded to 232 billion yuan (US$31.8 billion) from 199.8 billion yuan yesterday.

"People are worrying that the worsening subprime crisis may cause a US economy recession. This would reduce global demand of Chinese products," said Su Yanzhu, a fund manager with China Southern Fund Management Co. Ltd.

Other major Asian markets also suffered heavy losses on Tuesday. Japan's benchmark Nikkei 225 index has dropped more than five percent, and Hong Kong's Hang Seng Index was off around seven percent in afternoon trading.

Yesterday, stocks fell sharply in Asia and Europe following Wall Street's declines last week amid investor pessimism over the US government's stimulus plan to prevent a recession.

On Friday, US President George W. Bush announced a stimulus plan, which requires approval by Congress, for about US$145 billion worth of tax relief, in an attempt to ward off fears of a recession.

French Finance Minister Christine Lagarde said Tuesday that U.S. President George W. Bush must do more to revive the US economy and explain how he will inject more than 140 billion dollars into the world's biggest economy.

Hua Sheng, an industry analyst and president of YanJing Oversea Chinese University, said the drop was "normal and positive" because it helped squeeze out assets bubbles.

Another analyst who declined to be named said he expects the downward trend to continue through August.

Ping An Insurance plunged by the daily limit of 10 percent to 79.55 yuan. The country's second-largest life insurer said Sunday it planned to issue 1.2 billion A shares and no more than 41.2 billion yuan worth of convertible bonds.

China Coal Energy, the nation's second-largest coal producer, planned to issue no more than 1.525 billion A shares on the Shanghai Stock Exchange.

Banks fell sharply. Small-sized city commercial lender Bank of Ningbo plunged 9.16 percent to 16.95 yuan. Heavyweight ICBC lost 8.60 percent to 6.9 yuan and trading of BOC was suspended pending profit announcement.

Oil, property, steel, and nonferrous metals also posted heavy losses.

PetroChina, which accounts for about 25 percent of the Shanghai Composite Index, fell 4.73 percent to 26.18 yuan, the lowest closing since its record high of 48.62 yuan on its debut on Nov. 5. China Petroleum and Chemical Corp. (Sinopec) dropped 8.70 percent to 18.25.