Shanghai stocks fell for a second day on Tuesday, with gains in financials only partially soothing lingering concerns over policy tightening steps.
The Shanghai Composite Index, which shed 0.5 percent on Monday, lost 0.4 percent to 3,061.95 points.
The blue-chip CSI300 index rose 0.4 percent, to 3,424.19 points. Some brokers speculated that authorities directed purchase of heavyweight stocks to lift that index, which climbed for a third straight day.
The tech-heavy start-up board ChiNext closed down 1.7 percent, at its lowest level since February 2015, as a sharp correction in newly-listed stocks pressured the valuations of small-caps.
Over the past two months, investors have been grappling with a regulatory crackdown on risky lending practices and a shift toward tighter monetary policy as Beijing stepped up measures to defuse financial risks.
An advisor with the People's Bank of China (PBOC) said on Monday the central bank will continue to implement reasonable adjustments to monetary policy.
"If it went tight, it would be loosened a bit. The central bank will not overdo it, and any adjustment doesn't represent a shift in policy direction," Sheng Songcheng said.
On Tuesday, bank and consumer stocks gained, while industry shares pulled down indexes the most.
Liu Qihao, an analyst with Shanghai Securities Co., said investors are likely to remain cautious "as the possibly peaking economic growth in the first quarter could weigh on the profitability of listed companies".
The pace of IPOs could also dampen risk appetites for small-caps on expectations of more equity supply, Liu added.
