Chinese shares prices were sharply lower on Monday, as investors feared a higher inflation in February could trigger further tightening measures.

The benchmark Shanghai Composite Index, which covers both A and B shares on the Shanghai Stock Exchange, tumbled 154.22 points, or3.59 percent, to 4,146.30.

The index fell 4.19 percent at one time before bargain hunting trimmed some losses in late afternoon trading. The decline, the steepest in two weeks, sent the key index to the seven-and-a-half-month low.

The Shenzhen Component Index on the smaller Shenzhen Stock Exchange plunged 697.80 points, or 4.48 percent, to 14,863.05.

Losses outnumbered gains by 768 to 81 in Shanghai and by 609 to 58 in Shenzhen. Aggregate turnover stood at 139.21 billion yuan, almost flat from last Friday.

 The closely-watched February's consumer price index (CPI), a main gauge of inflation, is to be released on Tuesday, according to the National Bureau of Statistics (NBS) website.

The CPI surged to the 11-year monthly high of 7.1 percent in January. A Bank of China report forecast the figure would hit 8.3 percent in February.

The producer price index, also a key inflation indicator, rose 6.6 percent in February, the fastest in more than three years, and up from 6.1 percent in January, the NBS said on Monday.

Analysts believed the inflationary pressure would continue to remain for some period of time and this may spark further tightening measures. The Bank of China forecast in a separate report that China was likely to raise interest rates once or twice in the first half of the year.

Premier Wen Jiabao said in the 2008 Government Work Report on March 5 the major task of this year's macro-control is to prevent the overall price level from rising rapidly.

The recent weak regional markets also dampened investors sentiment, said Guo Huijuan, an analyst at Chinalion Securities. She said the news of the fifth batch of mutual funds approved by the securities regulator on Friday failed to shore up the market confidence.

The Dow Jones Industrial Average fell 1.22 percent to 11,893.69on Friday amid recession fears heightened by the surprisingly large number of job losses. U.S. employers cut 63,000 jobs last month, the most since March 2003, according to Labor Department data released Friday.

Tokyo's Nikkei 225 Index was down 1.96 percent to 12.532.13 and Hong Kong's key Hang Seng Index edged up 0.91 percent to 22,705.05,after struggling in the negative territory for most of the day.

Wu Kongyin, an analyst at Lianhe Securities, said that heavyweights dragged down the index and the non-ferrous metal, steel, and financial stocks were among the heavy losers.

Yunnan Copper plummeted 9.97 percent to 49.38 yuan and Jiangxi Copper slumped 6.69 percent to 49.35 yuan. Tangshan Iron and Steel fell 7.98 percent to 18.10 yuan.

Shanghai Pudong Development Bank slid 7.56 percent to 36.46 yuan and Ping An Insurance shed 4.67 percent to 64.50 yuan. Both companies were long under attacks as investors feared their large second offerings would add liquidity concerns to the equity markets.

PetroChina, which accounts for a quarter of the key Shanghai index, fell 2.83 percent to 22.00. China Petroleum and Chemical Corp. (Sinopec) sank 5.44 percent to 15.30 yuan.

China Railway Construction Corp., the country's leading rail builder, closed only 28.19 percent higher at 1.64 yuan on its debut in Shanghai because of the weak market. It was one of the worst first day performances among blue chips in Shanghai over the past year.