China stocks plunge Thursday despite favorable policies

Chinese shares closed lower on Thursday, with the benchmark Shanghai Composite Index down 3.48 percent to finish at 3912.77 points.

The Shenzhen Component Index dipped 5.32 percent to close at 12924.19 points.

Losers outnumbered winners by 878 to 54 in Shanghai, and by 1289 to 80 in Shenzhen. More than 1,400 shares on the two bourses dived by the daily limit of 10 percent.

Shares related to ship building, reforms in the oil and gas industry, real estate and electricity were biggest losers.

Bucking the trend, stocks of securities and banks were among the leading winners. Heavyweight stocks such as PetroChina and China Petroleum & Chemical also saw impressive gains. PetroChina increased 8.75 percent to close at 11.68 yuan per share.

The ChiNext Index, tracking China's Nasdaq-style board of growth enterprises, lost 3.99 percent to end at 2649.32 points.

The benchmark Shanghai index shed 24.29 percent over the course of more than two weeks. It nosedived 7.4 percent on June 26, the sharpest daily drop since June 10, 2008.

The slump continued despite a raft of government easing measures. The central bank cut interest rates and the reserve requirement ratio over the weekend. An official draft guideline on Monday gave pension funds the nod to invest in the stock market.

On Wednesday night, several favorable policies were rolled out in response to the plunging stock market, which has been on a more than two-week losing streak.

The two exchanges, and China Securities Depository and Clearing Company announced that transaction fees and transfer fees would be reduced on the Shanghai and Shenzhen stock exchanges.

China Securities Regulatory Commission (CSRC), the securities watchdog, announced that stock brokerages were allowed to issue bonds to widen funding channels.

The previously strict rules on margin trading business of brokerages were also relaxed by the CSRC.