SHANGHAI stocks today suffered their biggest drop in more than three weeks after data indicated China's manufacturing sector may expand at a slower pace in April.

The benchmark Shanghai Composite Index slumped 2.57 percent - the biggest daily losses since March 28 - to settle at 2,184.54 points.

Daily turnover was 82.2 billion yuan (US$13.3 billion).

HSBC Flash China Purchasing Managers' Index, the earliest indicator of China's economic condition, dropped in April to 50.5, compared with March's final PMI of 51.6, HSBC Holdings PLC announced today.

The index is a gauge of manufacturing activity slanted more towards private and export-oriented firms.

A reading of 50 or above means the activity is expanding.

"The PMI figures declining toward the negative territory fuelled concern over the sustainability of China's economic recovery and the prospects of listing companies," said Liu Kan, chief analyst with Guoyuan Securities.

Yi Wenbin, analyst with Huatai Securities, said the continuous liquidity withdrawal by the central bank also weigh on the market.

People's Bank of China today withdrew 10 billion yuan from the financial system via 28-day repurchase agreements.

It was the 10th consecutive week the PBOC has removed money via open market operations and brought the total amount of net withdrawal to 1.2 trillion yuan since the central bank restarted repo operations on February 19, the Securities Times reported.

Brokerages slumped among financial stocks after data showed the gross net profit of 15 listing securities firms decreased 36.4 percent year on year to 15.3 billion yuan.

Citic Securities, the biggest listed brokerage, dropped 4.9 percent to 12.16 yuan. Founder Securities Co slipped 6.2 percent to 6.85 yuan. Haitong Securities Co declined 6 percent to 10.24 yuan.