Chinese equities fell for a second day Thursday, led by market heavyweights, in the wake of the resumption of 3-year central bank bills which ignited concerns of further liquidity tightening.

The benchmark Shanghai Composite Index dropped 0.94 percent, or 29.51 points, to end at 3,118.71 points. The Shenzhen Component Index closed at 12,427.00 points, down 204.97 points, or 1.62 percent.

Combined turnover was 258.44 billion yuan (37.84 billion U.S. dollars), up from 229.82 billion yuan on the previous trading day.

Losers outnumbered gainers by 511 to 352 in Shanghai and 542 to 349 in Shenzhen.

The central bank said Wednesday it would restart issuing 3-year bank bills from Thursday, a move that showed the government intended to soak up liquidity which partly resulted in Thursday's widespread losses.

Property shares led the drop Thursday. China's Vanke, the country's largest real estate developer, was down 1.27 percent to 9.34 yuan. The Poly Real Estate Co., China's second biggest property developer, retreated 3.08 percent to 19.53 yuan.

Bank stocks posted lackluster performances in the afternoon trading session. China Construction Bank, the country's second largest bank by market value, dropped 0.53 percent to 5.67 yuan. Its rival Bank of China dipped 0.7 percent to 4.23 yuan.

Steel maker shares were down across the board with Baosteel, China's leading iron and steel maker, dropping 2.52 percent to 7.75 yuan.