HONG KONG — Chinese stocks fell, extending last week’s plunge, as factory-gate price data fueled concern the economic slowdown is deepening.

The Shanghai Composite Index slid 1.1 per cent to 3,151.12 at 10.21am local time, led by financial and energy companies. The producer price index slumped 5.9 per cent in December, extending declines to a record 46th month, data over the weekend showed. The Hang Seng China Enterprises Index tumbled 2.9 per cent, while the Hang Seng Index fell below the 20,000 level for the first time since 2013.

‘Pessimism is the dominant sentiment,” said William Wong, head of sales trading at Shenwan Hongyuan Group in Hong Kong. “The PPI figure confirms the economy is mired in a slump. Market conditions will remain challenging given weak growth and volatility in external markets and the yuan’s depreciation pressure.”

Extreme market swings this year have revived concern over the Communist Party’s ability to manage an economy set to grow at the weakest pace since 1990. Policy makers removed new circuit breakers last week after blaming them for exacerbating declines that wiped out US$1 trillion this year. Concern that a weakening yuan will spur outflows added to the selloff.

Authorities are stepping up intervention. The offshore yuan erased early losses after China’s central bank kept the currency’s daily fixing stable for the second day in a row, calming markets after sparking turmoil last week. State-controlled funds purchased Chinese stocks on Friday, focusing on financial shares and others with large weightings in benchmark indexes, according to people familiar with the matter.

The People’s Bank of China on Friday ended an eight-day run of reductions to the reference rate that sent shockwaves through financial markets. The offshore yuan rose 0.04 per cent to 6.6803 a dollar as of 9.43am in Hong Kong, after declining as much as 0.37 per cent. It sank as low as 6.7618 last week, within 0.4 per cent of a record 6.7850 seen in September 2010. BLOOMBERG