SHANGHAI shares fell for a third day in a row amid growing concern over economic growth after the government ordered companies in 19 industries to cut outdated production capacity.

The benchmark Shanghai Composite Index shed 0.51 percent to 2,010.85 points, paring this week's gain to 0.9 percent.

The Ministry of Industry and Information Technology late yesterday announced the first batch of more than 1,400 companies that are ordered to cut outdated production capacity by the end of September in 19 industries, including cement, steel, electrolytic aluminum, ferroalloy and papermaking.

"The detailed list shows the government is serious in its efforts to restructure the economy and is prepared to tolerate the necessary pain," Zhang Zhiwei, chief economist for China with the Nomura Securities, said in a note. "This reinforces our view that aggressive policy stimulus is unlikely in 2013, and growth should trend down."

Nomura expected China's gross domestic product growth to moderate to 7.4 percent in the third quarter and 7.2 percent in the fourth quarter after it slowed to 7.5 percent in the second quarter.

Inner Mongolia Baotou Steel Union Co decreased 2 percent to 3.87 yuan (63 US cents) after the steelmaker was asked to cut 173 tons of coking production capacity. Nanzhi Co, a Fujian-based paper manufacturer, lost 1.5 percent as the firm has to reduce 30,000 tons of production capacity.

Most lenders declined after the China Banking Regulatory Commission yesterday said the total assets of Chinese banks rose 13.5 percent year on year at the end of June, the slowest pace since 2011.

The Agricultural Bank of China fell 1.2 percent to 2.48 yuan. China CITIC Bank declined 1.1 percent to 3.48 yuan.