Google shares pared losses to 1 percent from a 1.6 percent decline earlier on Thursday after the company said on its website that its Internet search, mobile and advertising services could not be accessed in China.
The sell-off underscored investors' ongoing concerns about the fragility of Google's position in the country, after the company had a very public dispute with Beijing over Internet censorship earlier in the year.
However, some Internet users in the country reported no problems accessing the Chinese-language search page Google.cn.
Google later said in an emailed statement, "Because of the way we measure accessibility in China, it's possible that our machines can overestimate the level of blockage."
"That appears to be what happened last night when there was a relatively small blockage. It appears now that users in China are accessing our properties normally," the company added.
The world's No. 1 Internet search engine has been reporting sporadic disruptions to its mainland China services since it threatened in January to pull out of the country because of its Internet censorship practices and after a cyber-attack.
Google provides public updates about the availability of its services in China through a special website, here
Google generates a tiny portion of its nearly $24 billion in annual revenue in China, where the company lags home-grown search powerhouse Baidu Inc.
But China, the world's largest Internet market by users, represents an important growth opportunity for Google, which has seen its growth slow in mature markets like the United States and Western Europe.
Access to Google's various online services have long been spotty in China. In recent months, Google has reported partial blocking of access to its search, mobile and news services on many occasions.
"The last two or three months what we are seeing is nothing but posturing. It's posturing by Google and it's posturing by the local regulators there," said Caris & Co analyst Sandeep Aggarwal.
"Google is a truly global company and if you're a global company you cannot not operate in the world's largest Internet population," he said.
(Additional reporting by Paul Thomasch, Yinka Adegoke, Alex Dobuzinskis, Leah Schnurr and Melanie Lee; Editing by Tim Dobbyn, Tiffany Wu and Richard Chang)