SHANGHAI China stocks slumped on Thursday, tracking weakness in global markets, with investors worrying about the country's economic woes after the central bank conducted a lending operation at lower rates.

The Shanghai Composite index closed at the lowest level since Feb 19, while the Hang Seng Index finished at a three-month low.

Asian shares were hammered on Thursday as a slump in global tech stocks sent investors fleeing into less risky assets, including short-dated bonds, the yen and Swiss franc.

China's central bank surprised markets for a second time this week by conducting an unscheduled lending operation on Thursday at steeply lower rates, suggesting authorities are trying to provide heavier monetary stimulus to prop up the economy.

The medium-term lending facility operation comes after the central bank cut several benchmark lending rates on Monday.

China's stock markets reacted negatively to the news, taking the sudden urgency of the lending to mean the deflationary pressures and weakness in consumer demand are more severe than what is priced into assets. China reported weaker-than-expected GDP data earlier this month.

"The fact that scale is bigger than 10 basis points suggests there's more to come in terms of benchmark rate cuts," said Lemon Zhang, FX & EM macro strategist at Barclays.

"I would think it helps on the margin. But after all, you still have a very subdued growth momentum."

  - Reuters