China shares fall on year-end liquidity drain

Chinese stocks fell for a third day Thursday on a year-end liquidity drain led by corporate book closings and new share sales.

The benchmark Shanghai Composite Index lost 76.14 points, or 2.4 percent, to 3,179.08. The Shenzhen Composite Index for China's second exchange slipped 2.8 percent to 1,168.76.

Institutional investors are staying on the sidelines as companies close books at the end of the year, causing a drain on liquidity, analysts said.

A string of IPOs, and newly approved initial public offerings, are also attracting market capital.

"Today's fall was related to tightening capital and the influx of new shares," said Mao Sheng, an analyst for Huaxi Securities in the western city of Chengdu.

Financial shares led the decline.

Industrial & Commercial Bank of China Ltd., China's biggest commercial lender, and China Construction Bank Ltd. both lost 1 percent, -- ICBC to 5.18 yuan and CCB to 5.97 yuan. Bank of China Ltd. dropped 1.2 percent to 4.16 yuan.

Consumer goods-related shares pared previous gains, with Beijing Xidan Department Store Co. tumbling 5 percent to 10.40 yuan, and Sichuan Changhong Electric Co., a major home appliance maker, declining 4.7 percent to 6.25 yuan.

Nonferrous metals extended losses as commodity prices continued to slide. Jiangxi Copper Ltd., the country's biggest metal producer, shed 1.8 percent to 40.47 yuan, while Aluminum Corp. of China lost 4.4 percent to 15.17 yuan.

In currency markets, the yuan weakened to 6.8285 to the U.S. dollar, down from Wednesday's close of 6.8280.

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