China's leading stock index was down more than five percent in Thursday afternoon trade, despite the market regulator’s move to relax margin trading rules following heavy losses the previous day.

The benchmark Shanghai Composite Index slumped 5.02 percent, or 203.62 points, to 3,850.08. The Shenzhen Composite Index, which tracks stocks on China's second exchange, dived 5.63 percent, or 132.01 points, to 2,214.12.