China's shares slipped nearly 1 percent on Thursday as funds trimmed holdings in big caps such as Baoshan Iron and Steel Co Ltd to lock in profits.
But top Asian oil refiner Sinopec Corp bucked the trend after sources told Reuters the company would spend up to $1.02 billion to privatise a listed refinery subsidiary.
The benchmark Shanghai composite index closed down 0.86 percent at 1,095.273 points, reversing a 1.4 percent rise on Wednesday after Beijing unveiled steps to improve listed firms' accountability and quality.
Top Chinese steel mill Baosteel lost 1.27 percent to 3.89 yuan, wiping out a 1 percent gain on Wednesday.
Merchants Bank Co Ltd, the largest China-listed lender, ended down 1.11 percent at 6.22 yuan - also wiping out a near-0.5 percent rise in the previous day.
Petrochemical counters, however, gained on news that Sinopec is expected to privatise its unit, Sinopec Zhenhai Refining & Chemical Co Ltd, China's largest refiner.
Shares of Qilu Petrochemical Co Ltd, another subsidiary, surged 4.85 percent to 7.35 yuan on speculation that its parent would also take Qilu private.
Sinopec is trying to streamline its structure and boost returns.
The benchmark index, lifted briefly by the yuan revaluation on July 21, is down more than 13 percent so far this year.
"The bearish sentiment is here to stay, unless regulators issue more supportive policies," said Liu Benzheng, an analyst with Tiantong Securities.
"It's still pretty much a policy-driven market."