A massive selloff across the board dragged the key Shanghai stock index down to below the 2,000-level with heavily weighted property developers and financial firms leading the decline.

The Shanghai Composite Index slumped 30.75 points, or 1.52 percent, to settle at 1,992.65, with a turnover of 87.5 billion yuan (US$14.3 billion). The barometer ended the week with a 2.3 percent loss, snapping a winning streak of two weeks.

Homebuilders paced the losses for the market with a 3.7 percent drop in a gauge of property shares.

Poly Real Estate, China's second-largest developer, slid 5.6 percent, the biggest fall in four weeks, to 10.18 yuan. Meidu Holding Co, a Hangzhou-based housing developer, plunged 8 percent to 4.13 yuan, paring a 10 percent surge in the previous trading day.

"The property industry is stepping into a downward trajectory due to a tighter liquidity environment in the second half of the year that sees funds flow back to developed countries," said Luo Yu, analyst with research firm CEBM Group Ltd, in an industry report today.

"Meanwhile, the current property restrictions are expected to stay in place as upward pressure on home prices remains," Luo said.

Minsheng Banking Corp led the decline of financials as the Wall Street Journal cited Sanford C. Bernstein, an investment research firm, as saying that the lender's exposure to the interbank market is more than 30 percent of its balance sheet, higher than its peers, making it vulnerable to related regulatory changes.

Minsheng Banking Corp dropped 3.8 percent to 8.41 yuan, taking it down around 15 percent from mid-June, when China's worst liquidity squeeze in a decade emerged.

Shanghai Pudong Development Bank Co fell 2.1 percent to 8.03 yuan. Industrial Bank Co lost 3.3 percent to 9.37 yuan.