China's key stock index opened down 0.7 percent on Monday, with banking and property stocks slipping, after the People's Bank of China announced a rise in lenders' required reserves for the fourth time in just over two months.

Traders said the central bank's quantitative tightening step will help limit how much cash could flow into the stock market but it is a milder measure compared with an interest rate hike.

The benchmark Shanghai Composite Index .SSEC fell to 2,772.5 points, dropping below the crucial 125-day moving average at 2,780. The index lost 1.7 percent last week amid lingering fears over monetary tightening steps. ($1 = 6.6 yuan)