Banks lead decline in Shanghai stocks on weaker PMI data

Shanghai stocks fell 0.88 percent to 2,220.50 points in the morning session, due to the general decline in financial shares.

The HSBC Flash China Manufacturing Purchasing Managers' Index, the earliest available indicator of China's industrial sector, moderated to 50.3 in August, marking a three-month low after it delivered the best performance in 16 months in July.

The index indicates the economic recovery is still continuing but the investment activity growth is likely to slow down. The People's Bank of China will possibly loosen the monetary and fiscal policy that would dilute stability in the financial market, analysts said.

Shanghai Pudong Development Bank lost 1.45 percent to 9.50 yuan, while Hua Xia Bank dropped 1.41 percent to 8.40 yuan.