Markets narrow early losses, liquidity fears dominate trading

Stock markets on the Chinese mainland recorded additional losses Tuesday following Monday's calamitous retreat.

The Shanghai Composite Index fell 3.73 points, or 0.19 percent, to close at 1,959.51; while the Shenzhen Component Index slumped 1.23 percent, or 93.43 points, to finish at 7,495.10.

Both indices opened lower Tuesday as anxieties centering on liquidity levels precipitated a wave of sell-offs. Such concerns weighed on equities for most of the morning session and dragged the Shanghai Composite to an inter-day low of 1,849.65, marking the first time the benchmark had slipped below the 1,900-point mark since January 2009.

Conditions improved in the afternoon amid cautious optimism that the upcoming Lujiazui Forum 2013, a high-level economic and financial meeting, would offer the market some relief. Late rebounds in financial stocks cut down most of the morning's losses, yet weakness elsewhere kept the indices languishing in negative territory throughout the day.

Combined turnover of the two markets climbed to 214.3 billion yuan ($34.87 billion), up from Monday's 182.5 billion yuan.

China Minsheng Banking Corp was down 9.9 percent on the day at one point, yet an afternoon recovery pared this loss to 0.82 percent as the lender's Shanghai-listed shares closed at 8.44 yuan. Several banks managed to crack the break-even point, including Industrial Bank Co, which closed at 13.92 yuan after adding 0.22 percent. Shanghai Pudong Development Bank Co went up 3.72 percent to 7.80 yuan.

Meanwhile, gold stocks drifted lower again Tuesday. Shandong Humon Smelting Co lost 2.77 percent to 14.03 yuan. Zhejiang Ming Jewelry Co went down 1.40 percent to 11.98 yuan.