Chinese stocks extended declines on Monday morning on lingering worries over slower economic and corporate profit growth.

The benchmark Shanghai Composite Index finished the morning trade 48.09 points or 2.18 percent lower at 2,154.36. The Shenzhen Component Index dropped 221.96 points or 3.06 percent to 7,042.24.

The index opened slightly higher at 2,210.34 and rose as much as 0.82 percent to 2,220.55 at one time. This came amid broad gains on regional markets boosted by Sunday's news the US government will take over two mortgage giants Fannie Mae and Freddie Mac to stabilize the financial market.

Tokyo's Nikkei 225 index was more than 3 percent higher at about 1 p.m. local time. Hong Kong's Hang Seng index gained 3.8 percent at about 12 a.m.local time.

But the stocks reversed to losses later on low investor sentiment after the key Shanghai index plunged 8.1 percent last week. The index has fallen 64.8 percent from its all time high in mid October.

Market declines would continue in the short time against the backdrop of slower economic growth in China, according to Shenyin Wanguo Securities.

China is slated to release major economic data including consumer price index, industrial output and fixed asset investment starting from Wednesday.

The market slump also came despite China's securities regulator said Friday it will allow shareholders of listed companies to issue exchangeable bonds to ease oversupply of the shares after the lock-up periods.

Such bonds could provide shareholders with a new funding channel other than simply dumping their holdings. This would ease the impact of heavy selling, said an unidentified securities official in a statement.

Investors worried the shareholders would continue selling their stocks as the regulation was not mandatory, said analysts.