China's shares closed down on Friday, extending a correction that began two days ago after blue chips gave up more of their recent gains, traders said.
The benchmark Shanghai composite index, grouping hard-currency B shares and yuan-denominated shares slid 2.4 percent to 1,727.348 points.
The index had gained 19 percent since the start of 2004 through on Tuesday, making it the best performing index in Asia so far this year, after a record number of mutual funds poured money into booming sectors such as petrochemicals and steel.
Heavyweight Sinopec Corp, Asia's largest refiner, was the second most actively traded, falling three percent to 5.11 yuan. Baoshan Iron and Steel Co Ltd, the world's fourth most valuable steel maker, shed 2.3 percent to 7.09 yuan.
China Merchants Bank Co Ltd, the largest of the country's five listed lenders, shed 1.7 percent to 10.68 yuan. Profit taking also hit some smaller capitalised companies, which had been speculative targets in the market rally this year.
Integrated circuit producer Hangzhou Silan Microelectronics Co Ltd was one of the biggest decliners, diving 9.48 percent to 44.11 yuan.
Heavy speculation of potential prospects in the tiny company with total share capital of only 101 million yuan ($12.2 million) has pushed the stock up 129 percent this year to become the highest-priced stock on mainland bourses.
"The blitz of short position holders has dampened market sentiment, while the correction is likely to continue in the near term," said analyst Wang Xiaojun of Huatai Securities.
The Shanghai index has fallen 2.8 percent in the past three days after hitting its highest levels in about 30 months.