The Shanghai Composite Index was down 1 percent by the midday trading break, retreating from Wednesday's near four-month high. In Hong Kong, the Hang Seng Index ended the morning down 0.63 percent.
Trade data, which showed China swinging to a surprise trade deficit, the largest in seven years as the Lunar New Year holiday dealt a sharper blow to export activity than expected, did little to encourage investors to buy into early weakness.
"There's no spark to drive the index past 3,000 right now," said Nanjing Securities analyst Wen Lijun, adding that while bank earnings were expected to be positive, policy expectations were a bigger factor for the market on the day.
Financials were weaker in Hong Kong and Shanghai after posting steady gains since the last week of February as investors, including long-only funds, bought ahead of expected strong earnings.
The sector sub-index in Shanghai fell 1.7 percent, led by a 3 percent drop in Ping An Insurance (Group) Co of China Ltd, while a fall in trading volume hurt local brokerages such as CITIC Securities Co Ltd, down 2.8 percent.
In Hong Kong, the financials sector eased 0.67 percent, led by a 0.9 percent decline for shares of HSBC Holdings Plc.
Energy counters underperformed despite rising oil prices as market players worried about the impact on refining margins.
CNOOC Ltd fell 1.9 percent, the biggest drag on the Hang Seng Index.
It was further pressured by news that London-listed Tullow Oil Plc was still awaiting approval from the Ugandan government to bring in CNOOC and Paris-listed Total as partners in a key $10 billion project.
Bucking the weaker trend, Hutchison Whampoa Ltd rose 1.5 percent amid talk that the proposed Singapore listing of its port unit had seen strong interest.
Hutchison was among a handful of benchmark constituents that saw relatively active trading in the morning as overall turnover on the exchange remained light ahead of Chinese inflation data expected on Friday.
Expectations in the market have grown that inflation in China, which had threatened to spiral upwards on rising food and energy costs, would slow and ease fears about the government's fiscal tightening policies.
China was confident it could hold inflation to an average of 4 percent this year, the government's statistics chief said on Thursday, but a central bank adviser warned that soaring commodity costs were adding to upside risk.