China's shares dived 2 percent on Wednesday, finishing at their lowest level in more than eight years after big caps slid on resurgent fears of a flood of shares on to the market. The benchmark Shanghai composite index, which had been mired at its lowest in nearly eight years, closed at 1,039.187 points, the lowest finish since February 27, 1997, when it ended at 1,025.300.
Beijing called on large listed firms on Tuesday to prepare for the sale of untraded state holdings for the first time, as it sought to squash uncertainty over its latest effort to offload up to $300 billion in government-owned stock.
Analysts termed the move a two-edged sword, as it demonstrated the government's resolve in ending the stock overhang, but failed to address the liquidity issue.
Asia's top refiner, Sinopec Corp, heavily bought into by fund managers, slid 2.5 percent to 3.46 yuan.
China's third-largest listed electricity producer, Huadian Power, one of the day's most actively traded stocks, finished down 2.2 percent at 2.66 yuan.
And China United Telecommunications Corp Ltd, the smaller of the country's two cellular carriers, shed 1.6 percent to end the day at 2.49 yuan.
Beijing had in April renewed its attempt to offload government holdings in listed firms, an issue, which has weighed on bourses for years.
Investors had so far given the move a firm thumbs-down, pushing bourses to repeated six- or even eight-year lows.
The key index has lost 17 percent this year, extending a 15 percent slump in 2004 that made it the world's worst-performing major index that year, hit by factors such as many stock offers and Beijing's economic cooling steps.
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