HONG KONG (AFP, REUTERS) - Asian equities tumbled Wednesday as a collapse in Chinese shares began to contaminate other markets, and after European leaders slapped Greece with a deadline to submit fresh bailout reform proposals.

With markets buffeted by two global crises, traders ran for the cover of investments considered safe in times of upheaval such as the yen.

Shanghai plunged almost seven per cent and Hong Kong lost 4.74 per cent soon after opening, despite Chinese leaders announcing fresh measures to staunch a correction that has wiped trillions off the country's markets.

By late afternoon Shanghai was down 5.64 per cent and Hong Kong shed 4.78 per cent.

Most other regional markets were also hit by the spillover effects, with many hosting companies with links to China.

Tokyo sank 3.14 per cent, or 638.95 points, to 19,737.64, Seoul slipped 1.18 per cent, or 24.08 points, to 2,016.21 and Sydney retreated 2.01 per cent or 111.9 points to 5,469.5.

The Straits Times Index was down 48.32 points, or 1.45 per cent, at 3,292.61 at about 2:30pm.

"China's stock market rout is now spreading to other financial markets, creating a sweeping sense of panic and liquidity crunch," said Zheng Ge, an analyst at Wanda Futures Co.

Shanghai is down more than 30 per cent from its closing peak on June 12, when it had risen by more than 150 per cent in 12 months in a borrowing-fuelled frenzy enhanced by hopes for economy-boosting government measures.

However, analysts said new restrictions on margin trading and concerns about the overvaluation of many stocks have forced mainland investors - mostly individual retail traders - to cash out.

There are now fears that the hammering to stock markets will hit the wider Chinese economy, the world's second biggest, which is already struggling with slowing growth.

Wednesday's falls came despite the government announcing new measures to support the market, while Bloomberg News reported that the recent slump has led at least 1,249 companies to halt trading in the mainland, accounting for 43 per cent of total listings.

Alex Wong, Hong Kong-based asset-management director at Ample Capital, added: "Gradually this will drag other markets lower because the magnitude of a China crisis would be far bigger than anything happening in Greece."

In Hong Kong the Hang Seng China Enterprises Index - which tracks Chinese firms listed in the city - slumped 5.25 per cent.

"The main reason the Hong Kong market is going down is because these two markets (Shanghai and Hong Kong) have high correlation, with many mainland companies listed in both," said financial analyst Castor Pang.

US-listed Chinese stocks - including Alibaba and Baidu - took a hit as the shockwaves of the rout in Shanghai reverberated globally.

U.S. stock futures extended falls in Asian trading on Wednesday, tumbling more than 1 per cent as plunging Chinese shares rattled investors. S&P 500 E-mini futures were last down 1 per cent on the day at 2,053.75, after dropping as low as 2,052.25.

On currency markets the US dollar fell to 122.02 yen against 122.55 yen, with the Japanese unit considered a safe bet.

The euro fell to US$1.0991 from US$1.1007 in New York, although it is up slightly from a five-week low of US$1.0916 it touched in US trade. The single currency was also at 134.30 yen against 134.89 yen.

In Europe, Greece moved closer to an exit from the eurozone after leaders ordered it to submit detailed bailout reform proposals by Thursday, while warning they had drawn up contingency plans in case it does not meet expectations.

On oil markets US benchmark West Texas Intermediate for August delivery dropped 14 cents to US$52.19 a barrel and Brent tumbled 13 cents to US$56.72, both reversing an earlier uptick.

Gold fetched US$1,152.80 compared with US$1,165.74 late Tuesday.