China's shares logged their biggest single-day drop in over a month on Thursday, as investors dumped blue chips like Baosteel on news a sum of nearly $250 million set aside by its parent to support its stock price had run out.
The benchmark Shanghai composite index closed down 2.36 percent at 1,159.960 points, its steepest daily slide since August 18, when it lost 3.8 percent.
Baoshan Iron & Steel Co Ltd, China's largest steel mill, dived 2.48 percent to 4.32 yuan.
The company had been drafted into an unpopular programme to convert $200 billion of government holdings in listed firms into free-floated stock.
Its state-run parent had set aside 2 billion yuan ($250 million) to buy into the shares in the event they dipped below a certain level.
But on Thursday its listed unit said that those supporting funds had been depleted.
Other firms planning to join the nation-wide state share reform also slid.
Minsheng Banking Corp, China's first private lender, lost 4.29 percent to end at 5.58 yuan.
Beijing kicked off in April its attempt to get rid of a stock overhang that has weighed on markets for years, helping push the market to multi-year lows.
The index, lifted by the yuan revaluation on July 21, is still down over 8 percent this year.
Analysts said the Baosteel announcement brought back worries of a flood of state shares which could further exacerbate already tight liquidity.
"The market could head further south on these state share reform concerns," said Liu Xiaochang, an analyst with Huatai Securities.