* CSI300 -0.3 pct; SSEC -0.4 pct
* Strong inflows into Shanghai's top ETFs
* Analyst warns too early to judge if market has bottomed out
SHANGHAI, July 1 (Reuters) - China stocks drifted slightly lower on Wednesday morning, as investor sentiment stabilised following a raft of government measures aimed at stemming two weeks of panic selling.
The CSI300 index dipped 0.3 percent, to 4,460.75 points at the end of the morning session, while the Shanghai Composite Index lost 0.4 percent, to 4,260.13 points.
Trading was much less volatile than in the previous session, when the CSI300 surged 6.7 percent after wild swings, as Beijing's efforts to contain the sell-off appeared to work in the last hour of trading on Tuesday.
China cut interest rates over the weekend, unveiled plans to let pension funds buy stocks on Monday, and China's fund association on Tuesday sought to rally confidence by saying the falling prices presented valuable buying opportunities if hedge fund managers made rational investment decisions.
Two consecutive days of strong money flows - worth a combined 25 billion yuan ($4.03 billion) - into Shanghai's top exchange-traded funds (ETFs) also fuelled expectations that state-backed investors are stepping in to arrest a further market slide.
But some analysts warn it is too early to judge that the correction - which knocked main indexes down more than 20 percent from their mid-June peak in just two weeks - is over.
"More observation is needed to judge whether the market has stopped its slide," said Zhou Lin, analyst at Huatai Securities Co.
"If you look at the degree of correction, you can even call this a bear market, or a monkey market, if you look at the volatility."
Bank of America Merrill Lynch said in a report that the market slump, which was triggered by concerns over a government crackdown on leveraged trading activities, has dented investor confidence, making sharp rallies unlikely.
"We doubt that this marks the end of the de-leveraging process in the stock market given that much of the leveraged positions are yet to unwind," the bank said.
"After this adverse experience, we expect many investors will be much more cautious before investing into the stock market, using leverage. The air had probably been let out of the balloon and we will be surprised to see a return of the unbridled enthusiasm of investors any time soon."
Banking stocks corrected after Tuesday's surge.
But Shenzhen's growth board ChiNext rebounded sharply, rising 2.7 percent.
The Hong Kong stock market is closed on Wednesday for a public holiday. (Reporting by Samuel Shen and Pete Sweeney; Editing by Jacqueline Wong)