At closing bell, the benchmark Shanghai Composite Index dropped 3.86%, or 128.34 points, to 3,196.77. The Shenzhen Composite Index, which tracks stocks on China's second exchange, tanked 5%, or 112.57 points, to 2,138.36. The blue-chip CSI300 index shed 4.39%, or 206.35 points, to 4,505.59.
In the latest deterioration in Sino-U.S. ties, Beijing vowed to close the U.S. consulate in the southwestern city of Chengdu. Beijing's decision was a retaliatory move after Washington abruptly ordered the closure of the Chinese consulate in Houston this week, amid allegations of spying, highlighting rising tensions between the global superpowers.
China's consul general in Houston said the forced closure of the diplomatic compound by Washington would further damage US-China relations, adding that the US State Department needed to provide the evidence behind its espionage allegations.
Kweichow Moutai, one of the most popular stocks on the mainland as well as on the Stock Connect, fell 4.8% to 1,595.30 yuan, contributing the most to the Shanghai benchmark's fall.
Hangzhou Shenhao Technology, which produces electrical power equipment, rose by the limit, 44%, to 43.79 from its listing price of 30.41 yuan.
CURRENCY NEWS: The yuan declined against the dollar on Friday, due to weaker official guidance rate set by central bank after a dramatic escalation in tensions between Washington and Beijing. Prior to the market opening, the People's Bank of China (PBOC) weakened the midpoint rate to 6.9938 per dollar, 17 pips, or 0.02%, weaker than the previous fix of 6.9921.
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