SHANGHAI: The Shanghai stock market dropped the most in four weeks on Thursday after the country kept a key interest rate steady and as expectations of further policy support from Beijing dwindled. The Shanghai Composite index fell 1.3% to close at 3,363.90, marking its worst day since July 24.

The blue-chip CSI300 index also fell 1.3%, with its financial sector sub-index down 1.3%, the real estate index down 0.3% and the healthcare sub-index down 0.8%. The smaller Shenzhen index fell 1.2% and the start-up board ChiNext Composite index weakened almost 1%. Shanghai's tech-focused STAR50 lost 2%.

China kept its benchmark lending rate for corporate and household loans steady, as expected, for the fourth straight month at its August fixing on Thursday. The news came after premier Li Keqiang stressed last week that China would not resort to a flood-like stimulus.

Chinese A-shares were dragged down by expectations that interest rates will not go any lower, said Steven Leung, a Hong Kong-based executive director at UOB Kay Hian. "The market is worried about there may not be more much liquidity to come," he added. The Shanghai stock index is up 10.3% and the CSI300 has risen 14.2% this year. Shanghai stocks have risen 1.6% this month. About 33.56 billion shares were traded on the Shanghai exchange, less than the previous session's 40.57 billion.