China stocks suffered their sharpest daily percentage decline since 2007, as worries mount that authorities are pulling back on measures to prop up the market.

The Shanghai Composite Index ended down 8.5% at 3725.56, its second-straight day of losses and worst daily percentage fall since February 27, 2007. China’s main index is up 6% from its recent low on July 8, but still off 28% from its high in June.

The...