China's stock markets closed sharply lower on Monday after a frantically volatile day of trading, despite surprise monetary easing moves by the central bank at the weekend.

The People's Bank of China had said one of the goals of Saturday's decision to cut both lending rates and reserve requirements at some banks was to stabilize stock market fluctuations, but Monday's trade saw wild swings.

The chaotic trading day was an uncomfortable backdrop for policymakers in Beijing, where delegates from 57 countries gathered to witness the signing of the articles of agreement for a Chinese-led development bank, which is expected to rival institutions such as the World Bank and the Asian Development Bank.

At one point in the early afternoon the CSI300 index .CSI300 of the largest listed firms in Shanghai and Shenzhen was down over 7 percent, but less than an hour later it had recovered almost completely and crossed back into positive territory, leading to speculation that state-owned asset management companies had intervened to prop up the market at the last minute.

Even so, the CSI300 index .CSI300 closed down 3.3 percent at 4,191.55 points, while the Shanghai Composite Index .SSEC lost 3.3 percent to 4,054.86 points, falling below its 100-day moving average for the first time since the rally began in the third quarter of 2014.

Hong Kong markets also dropped over 2 percent, with investors running for cover, worried that Greece might default in the middle of a Chinese stock market rout, amplifying the downside.

The sudden collapse of mainland equity markets has wiped a combined 16.35 trillion yuan ($2.63 trillion) off market capitalization - more than the GDP of Brazil - since a June 12 peak, dealing substantial damage to retail investors' confidence in just a few short weeks.

Lu Yahu, a 40-year-old stock investor, said he would use any rebound as a chance to sell off his remaining stocks, as he's convinced the bull run is dead.

"With this sort of slump, are we still in a bull market? Of course not," said Lu, who said he was facing losses of up to 40 percent after buying shares in a Chinese automaker.

"Don't believe in rhetoric about the 'slow bull' in state media," he added.

"I have no confidence in China's economy. It's not going to get better in the next 20 years."

SELL OFF

One internet finance company Qiaoniu.com, which lends investors money to buy stocks, urged clients to get out of the market by 2:30 pm, or the lender would force them to.

"In order to avoid unnecessary losses, stock investors, please evacuate your positions," said the company in an online statement picked by local media and circulated widely online.

The company, which has over 100,000 members, had lent over 2.7 billion yuan to investors as of April. It pulled the posting in the afternoon, saying it was a mistake, and did not answer calls requesting comment.

Market analysts blamed the destabilizing influence of leverage in the market for the enduring weakness, aggravated by a lack of economic data to support a rally that had seen major indexes rise as much as 150 percent by early June.

"The rapid growth of leverage over the past year is a key point of difference between now and 2008, when the bursting of the bubble left the financial system unscathed," wrote Mark Williams of Capital Economics in a research note, noting that margin positions at around $350 billion were equivalent to 3.5 percent of the country's GDP.

"This is already a huge amount, but the use of borrowed money to speculate on stocks goes far beyond those with accounts at the regulated brokers."

However, pessimism is not universal. In the past sharp corrections have ultimately proven to be buying opportunities after markets have calmed down, and some are still betting there are more good times to come.

Fu Haizhong, a 74-year old investor who spoke to Reuters from a trading room in downtown Shanghai, was already bargain shopping.

"Look," he said, pointing at his trading terminal screen. "I bought China National Nuclear Power (601985.SS) when it was at its lowest today. I'll sell when it rises. If not today, then tomorrow. If not tomorrow, then the day after tomorrow."