Chinese shares fell back into negative territory on Wednesday despite better-than-expected second-quarter economic growth.
The benchmark Shanghai Composite Index slumped 3.03 percent to close at 3,805.7 points. It dipped more than 4 percent below 3,800 points during the afternoon session before making up ground.
The newly released economic growth rate, which stood at 7 percent in the second quarter and beat a median market forecast of 6.9 percent, failed to buoy the stocks.
The fall extended a retreat seen on Tuesday, when the Shanghai index lost 1.16 percent, reversing a rebound that had lasted for three consecutive trading days before that.
On Wednesday, the smaller Shenzhen Component Index dived 4.68 percent to close at 12,132.42 points.
The ChiNext Index, tracking China's Nasdaq-style board of growth enterprises, plummeted 4.99 percent to end at 2,590.03 points.
Losers outnumbered winners by 821 to 102 in Shanghai, and by 893 to 270 in Shenzhen.
The combined turnover of the two bourses contracted to 1.25 trillion yuan (201.4 billion U.S. dollars) from Tuesday's 1.322 trillion yuan.
Share values bounced back last week from a market rout that had seen the Shanghai index sink by more than 30 percent from a peak in June. The bounce came as government support moves, including pouring in funds and restricting futures trading on a major small-cap index, took effect.
As hundreds of companies that halted trading to avert market plunges have now returned to the market, investors tried to dump previously tied-up shares or lock in profits after three days of rebound, sending stock prices down, analysts said.
While some are optimistic that state backing will sustain the bull market, an analysis note from HFT Investment Management Co., Ltd. warned of the possibility of market divergence as stock prices of certain individual companies are still frothy.
The stock market has seen liquidity quickly recovering and operations stabilized after the government stepped in, and systemic risks have been reduced, which will buttress the share prices, GF Securities said in a note.
Nuclear power firms were among the biggest losers. As many as 28 companies in the sector saw prices tumbling by the daily limit of 10 percent.
Securities stocks also suffered. Everbright Securities shed 9.45 percent to 20.99 yuan.
The oil sector bucked the downward trend, with PetroChina, the country's top oil producer, jumping by the daily limit of 10 percent to 13.52 yuan.