While markets in Tokyo also fell amid concerns about China's economy, the Shenzhen market saw its worst month in seven years.
Prospects of an interest rate hike by the U.S. Federal Reserve in September has made world markets jittery.
TV reports showed a journalist 'confessing' to causing stock market volatility. A regulatory official was accused of taking bribes and insider trading.
Earlier on Monday, police announced they had found bomb-making materials in a second apartment near where the main suspect of the Aug. 17 bombing was arrested.
Despite massive protests over the weekend calling for his ouster, the Malaysian prime minister has refused to step down, rejecting all allegations against him.
The security bill, which would allow Japanese forces to fight alongside their allies overseas, has been deeply controversial among the Japanese public.
Parts of the 2,000-year-old temple were reportedly blown up by ISIS Sunday afternoon -- just days after the destruction of the ancient Baalshamin temple.
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