Chinese shares close mixed Tuesday

Chinese shares closed mixed on Tuesday, ending a rally that lasted for three trading days.

The benchmark Shanghai Composite Index lost 1.16 percent to close at 3,924.49 points, plunging nearly 3 percent during a volatile afternoon trading session.

The smaller Shenzhen Component Index climbed 0.91 percent to close at 12,728.51 points.

The ChiNext Index, tracking China's Nasdaq-style board of growth enterprises, rose 1.6 percent to end at 2,726.05 points.

Winners outnumbered losers by 590 to 322 in Shanghai, and by 833 to 246 in Shenzhen.

The combined turnover of the two bourses rose to 1.322 trillion yuan (212.1 billion U.S. dollars), from Monday's 1.174 trillion yuan.

The Shanghai index has dropped by more than 30 percent from a peak in June before storming into positive territory last week after drastic government moves to prop up the market.

Regulators poured in funds, restricted futures trading on a major small-cap index, and probed "malicious short selling".

Despite previous rebounds, it is increasingly difficult for the market to continue to rally, as large-caps have begun showing signs of softening. As more companies that stopped trading during the rout gradually return to the market, investors' confidence will be further tested, Shaanxi Jufeng Investment Information, a securities investment consulting firm, said in a note.

Investors should not be blindly optimistic or too pessimistic, as the positive trend still remains while it's too early to say the market has bottomed out, according to the note.

Financial stocks plunged the most. The Industrial and Commercial Bank of China, the country's largest lender by market value, shed 2.28 percent dropping to 5.15 yuan. China Merchants Securities plummeted 6.98 percent to close at 24.64 yuan.

Airplane and aerospace companies were the biggest winners. AVIC Aircraft Co., Ltd. rose 1.91 percent to 34.2 yuan. China Spacesat Co., Ltd. jumped by the daily limit of 10 percent to 46.08 yuan.