Chinese shares tumbled Tuesday with the benchmark Shanghai Composite Index (SCI) plunging more than 5 percent -- the sharpest fall in more than five years.
The slump ended strong rallies spanning five straight trading days since last Tuesday, Xinhua reported. It also came as a stark reversal against previous winnings that saw the SCI gain 23 percent during the period Nov 20-Dec 8.
Tuesday's tumble also brought the SCI below the psychological threshold of 3,000, shortly after the index climbed above it Monday for the first time since April 25, 2011.
During the afternoon trading session, the benchmark SCI fell more than 6 percent before recovering marginally to close at 2,856.27 points, down 5.43 percent. The Shenzhen Component Index closed at 10,116.49 points, down 4.15 percent.
The combined turnover on the Shanghai and Shenzhen bourses hit a historical high of 1.27 trillion yuan ($207.5 billion), expanding from 981.07 billion yuan the previous trading day. It also surpassed the historical record of 1.07 trillion yuan seen Friday.
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A total of 173 listed companies on the A-share market fell by the daily limit of 10 percent. Meanwhile, the rise of 186 stocks was far eclipsed by decline in 2,200 companies.
Banks and the insurance sector performed the worse, falling 8.95 percent and 9.47 percent, respectively.
China's four major state-owned banks all fell over 9 percent; China Life, the nation's largest life insurer, fell by the daily limit of 10 percent.
Shares of heavyweight companies also dropped, with Sinopec down 8.24 percent and PetroChina down 7.95 percent.
Chief strategy analyst at Great Wall Securities, Zhu Junchun, said the market tumble was a stark lesson for overly optimistic investors. However, he believed, the fall was an adjustment following weeks of strong rallies, reversing the bullish market trend, and bets on more policy easing measures, including cuts of the reserve requirement ratio and further interest rate cuts next year.
The slump coincided with the start of the Central Economic Work Conference Tuesday, during which Chinese leaders are expected to review 2014's economic measures and map out plans for 2015 based on the economic "new normal".
