China's market regulator has barred major shareholders and executives of listed companies from selling their shares for the next six months, it said in a statement, the latest government action to stem a slide in the markets.

China's benchmark Shanghai stock index was down 3.7 percent on Thursday morning, extending losses from a day earlier, despite more government moves to avert a market collapse.

The benchmark Shanghai Composite Index dropped 129.94 points to 3,377.25. The Shenzhen Composite Index, which tracks stocks on China's second exchange, slid 0.74 percent, or 13.91 points, to 1,870.54.

Japan's Nikkei 225 is also down just over two percent, but the Hong Kong's Hang Seng is up by 0.61 percent.

Taiwan shares fell sharply in early trade as fears of a meltdown in China's stock markets triggered another bout of selling.

As of 01:03 GMT, Taiwan's main TAIEX index was down 2 percent, following heavy losses in the previous session.

Since mid-June, the Chinese stock market has lost almost a third of its value - a loss of $3.2 trillion.

"The market is still uncertain, but it's much better than previous days," Qian Qimin, an analyst from Shenyin Wanguo Securities, told the AFP news agency.

The latest government measure was aimed to "maintain stability of the capital market and earnestly protect investors' legal rights", the China Securities Regulatory Commission (CSRC) said on its verified microblog late on Wednesday.

On Wednesday, the Shanghai Composite closed down 5.9 percent. China's two oil giants were among the biggest losers in Shanghai. PetroChina slumped 9.07 percent to 12.33 yuan while Sinopec fell by its 10 percent daily limit to 6.72 yuan.

There were also heavy losses in Asia's other top markets. The Hang Seng in Hong Kong fell 5.8 percent - its biggest drop since the global financial crisis in 2008.

And the sell-off also spread to Japan, where the Nikkei 225 dropped by just over three percent on Wednesday.