SHANGHAI—China’s stock market tumbled and suffered its shortest trading day in its 25-year history on Thursday, as Beijing’s growing tolerance of a weaker currency intensified concerns about capital flight and the health of the world’s No. 2 economy.

Markets stopped trading about 30 minutes after they opened, as a newly installed mechanism to limit volatility was triggered for the second time this week. China’s securities regulator said later Thursday that it would suspend the new circuit breaker mechanism that has been at...