China stocks drop on forward repo

Chinese shares fell on Tuesday after the country's central bank launched a forward repurchase operation (repo) to maintain the interest rate in the capital market at an appropriate level.

The benchmark Shanghai Composite Index edged down 0.18 percent, or 3.76points, to finish at 2,071.47. The Shenzhen Component Index dropped 0.61 percent, or 44.8 points, to close at 7,347.11.

Combined turnover on the two bourses stood at 241.45 billion yuan (39.43 billion U.S. dollars), almost flat with that of the previous trading day.

On Tuesday, the People's Bank of China announced to issue 14-day and 28-day forward repurchase agreements, which will together withdraw 85 billion yuan from the money market.

It is the fifth straight time the central bank has launched repos since Feb. 18, with 365 billion yuan moved from the capital market.

The lackluster performance of Chinese shares was also weighed on by the retreating global market.

On Monday, the Dow Jones Industrial Average plunged 153.68 points, or 0.94 percent, to 16,168.03 following global equity selling triggered by escalating tensions in Ukraine.

Chinese shares related to environmental protection led Tuesday's decline. Beijing Originwater Technology fell 2.2 percent to finish at 36.4 yuan per share, while Fujian Longking dropped 2.7 percent to close at 33.48 yuan per share.

Liquor producers also suffered. Kweichow Moutai, the country's major alcohol maker, tumbled 0.99 percent to finish at 153.4 yuan per share.

Bucking the trend, shares related to the free trade area in north China's Tianjin Municipality surged. Tianjin Marine Shipping jumped 5.32 percent to 7.13 yuan per share.

The ChiNext Index, tracking China's Nasdaq-style board of growth enterprises, dropped 0.32 percent, or 4.69 points, to end at 1,460.45 points on Tuesday.