China shares slip after Monday shock

Chinese shares extended their losses on Tuesday following Monday's drastic slump.

The benchmark Shanghai Composite Index lost 0.19 percent, or 3.73 points, to end at 1,959.51, the lowest point in nearly seven months, while the Shenzhen Component Index shrank 1.23 percent, or 93.43 points, to 7,495.10.

Combined turnover on the Shanghai and Shenzhen bourses expanded to 214.3 billion yuan (34.69 billion U.S. dollars) from 179.56 billion yuan on the previous trading day.

The banking sector saw fewer losses than Monday, with no shares shedding the daily limit.

The Industrial Bank Co. rebounded 0.29 percent to end at 13.93 yuan (2.26 U.S. dollars) per share.

Ping An Bank declined 1.67 percent to 9.98 yuan, while China Minsheng Bank dipped 0.82 percent to 8.44 yuan per share.

Bucking the trend, the sectors of communication devices and Internet led the increases, each up over 3.5 percent.

The ChiNext Index, tracking China's Nasdaq-style board of growth enterprises, rebounded 1.37 percent on Tuesday after diving 5.27 percent on the previous trading day.

China's key stock index recorded the biggest daily loss in nearly four years on Monday over worries about the liquidity crunch in the financial system and subdued strength in the world's second largest economy.

The People's Bank of China (PBOC), the central bank, urged lenders to control risks from credit expansion after the country's short-term interbank rates rocketed to unusual levels during the past two weeks.

In a statement, the PBOC said the country's liquidity remains at a reasonable level, signalling no intention to help ease the cash crunch that investors fear would threaten China's prolonged recovery.

CITIC Securities said in its report released Tuesday that the concerns over liquidity shortage and the PBOC's statement intensified the worries of investors, which was expected to be eased after the beginning of July.