BEIJING, Jan. 19  -- Chinese shares dived on Monday, with the key Shanghai index taking its biggest tumble in more than six years, led by brokerages after regulators took measures to clamp down on margin trading.

The benchmark Shanghai Composite Index plummeted 7.7 percent to end at 3,116.35 points, the steepest daily fall since June 2008. The Shenzhen Component Index sank 6.61 percent to end at 10,770.93 points.

Citic Securities, Guotai Junan Securities and Haitong Securities, the nation's three leading listed securities firms, fell by the 10-percent daily limit after they were suspended from lending money and stocks to new clients for three months, according to a China Securities Regulatory Commission announcement on Friday.

The regulator also announced punishments for nine other brokerages for violating rules in their margin trading business.

Analysts said strengthened checks on margin trading, which is believed to have fueled the recent rally in the stock market, caused panic and hurt sentiment.

Monday's slump started in the brokerage sector, mainly due to Friday's penalties, and then spread to other sectors, said Wang Chun, chief analyst with HSBC Jintrust, an investment firm.

Stocks of all commercial banks and insurance firms, except New China Life Insurance, which suspended trading on Monday, also fell by the daily 10 percent limit.