Chinese stocks closed lower Tuesday amid concerns that the central bank may further beef up liquidity management to cool inflation.
The benchmark Shanghai Composite Index fell 25.93 points, or 0.87 percent, to 2,958.08.
The Shenzhen Component Index declined 197.91 points, or 1.54 percent, to 12,677.61.
Combined turnover shrank to 337.62 billion yuan (about 51.15 billion U.S. dollars) from 342.63 billion yuan the previous trading day.
Losers outnumbered gainers 676 to 247 in Shanghai and 1,045 to 250 in Shenzhen.
The People's Bank of China (PBOC), the country's central bank, said Monday that the country would work to improve its prudent macro policies, boost effective liquidity management and keep financing from all sources at a reasonable level.
The China Securities Journal reported Monday that the central bank may raise borrowing costs again as the consumer price index, the main gauge of inflation, could very likely top 5 percent in March after rising 4.9 percent in both January and February.
The PBOC has increased the bank reserve requirement ratio nine times since the beginning of last year and raised benchmark one-year borrowing and lending rates in February this year.
Share prices of small and medium-sized companies at the Shenzhen bourse extended losses Tuesday by dropping 2.08 percent, leading the broader market down, after declining 1.34 percent the previous trading day.
The ChiNext Index launched by the Shenzhen Stock Exchange which tracks performances of technology and innovation-driven start-up firms, plunged 3.14 percent to 1,019.04.
The Shenzhen Sunway Communication Co., Ltd., and the Walvax Biotechnology Co., Ltd., listed on the ChiNext start-up board, both fell by the daily limit of 10 percent Tuesday.
Bucking the trend, the Anhui Water Resources Development Co., Ltd. jumped by 9.31 percent to 20.08 yuan after Chinese Minister of Water Resources Chen Lei said Monday that the country would step up the development of irrigation and water conservation projects over the next five years.
