China's shares closed down last week, under pressure from several domestic A-share initial public offerings (IPOs).

Regulatory warnings against alleged irregular trading at 31 brokerage branches also pulled down the markets.

Shanghai's composite index sank 65.78 points to 1,603.91. Shenzhen's shares lost 138.86 to 3,173.90.

Shanghai's hard-currency B shares slid 1.04 to 151.19. Shenzhen's B-share index lost 4.69 to 228.75.

"Share indices were weighed down by double pressures of a quick expansion of the domestic A-share market and signs of a continued crackdown on market irregularities," said Zheng Weigang, a senior analyst at Shanghai Finance Securities.

Under pressure of a quickened pace of market expansion, share indices are likely to consolidate narrowly to seek new leads, analysts said.

COSCO Shipping Co, owned by the Guangdong subsidiary of China's largest shipping group COSCO, said last Friday it planned to issue 130 million A shares next week to raise up to 960.7 million yuan (US$115.7 million). A shares are reserved for Chinese investors.

The deal follows a string of new issues including the country's second largest domestic IPO by China Merchants Bank, which raised fears of a liquidity squeeze, brokers said.

Merchants Bank, one of the country's most profitable, ended subscription for an A-share IPO of up to 10.95 billion yuan (US$1.33 billion) last Wednesday, the country's second largest offering ever.

A slew of companies have announced plans to list, including China Southern Airlines which said last Wednesday it planned to issue up to 1 billion A shares this year pending regulatory and shareholder approval.

Baoji Titanium, based in the northern province of Shaanxi, launched a 60 million A-share IPO yesterday to raise up to 324 million yuan (US$39 million).

Sentiment was also dampened by newspaper reports that regulators had found 31 brokerage branches had allegedly opened proprietary stock trading accounts illegally, brokers said.

Under Chinese regulations, only the head office of securities firms are permitted to trade shares on their own accounts.

The China Securities Regulatory Commission issued warnings to the brokerage branches, newspaper reports said.

Another negative factor for the market last week was central bank Governor Dai Xianglong's remarks. He was quoted by media as saying last Monday the issue of setting up a financial institution to invest some of China's foreign currency personal savings in markets abroad had become a "hot topic."

"Investors believe liquidity will quickly flow out of the B-share markets if China allows personal foreign exchange deposits to be invested in overseas bourses," said a floor trader at a foreign brokerage in Shanghai.

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