Chinese shares drop as PBOC signals deleveraging

Chinese shares fell on Wednesday after the central bank signaled it would reduce economic leveraging and that it expected CPI to rise this quarter.

The benchmark Shanghai Composite Index fell 0.82 percent, or 17.63 points, to finish at 2,139.61. The Shenzhen Component Index plummeted 1.94 percent, or 163.87 points, to finish at 8,287.86.

Combined turnover on the two bourses increased to 187.43 billion yuan (30.49 billion U.S. dollars) from 27.02 billion yuan on the previous trading day.

Only about 600 shares on the two bourses saw gains and 24 of them ended the trading day with the 10-percent increase daily cap.

The People's Bank of China (PBOC), the central bank, released its monetary policy implementation report on Tuesday, pointing out that the economy may go through a long process of reducing leverages and production capacity and that it expected a CPI rise in the fourth quarter.

Stocks in the banking sector led Wednesday's fall, as the country's banking regulator China Banking Regulatory Commission mulls enhancing liquidity regulations in commercial banks.

Stocks related to gasoline reform, environmental protection and shale gas led the gains as China's leading economic planner, the National Development and Reform Commission, looks to promote the use of natural gas to replace gasoline and coal to cut down pollutant emissions so as to tackle worsening smog.

Sinopec, the country's top oil refiner, which announced Tuesday that its major shareholders raised share holdings, rose 2.16 percent to 4.72 yuan per share. PetroChina, the nation's largest oil and gas producer, surged 1.28 percent to 7.91 yuan.

The ChiNext Index, a NASDAQ-style board tracking China's growth enterprises, dropped 1.45 percent, or 18.24 points, to close at 1,241.79 points.