SHANGHAI shares yesterday fell for a third straight day amid economic growth concerns after the government ordered companies in 19 industries to cut outdated production capacity.

The Shanghai Composite Index shed 0.51 percent to 2,010.85 points.

Earlier in the day, the index had declined 1 percent but strength among small-cap IT firms and environmental-protection companies helped reduce the loss.

The index gained 0.9 percent over the week.

On Thursday, the Ministry of Industry and Information Technology said more than 1,400 companies in 19 industries had been ordered to cut outdated production capacity by the end of September. The industries included cement, steel, electrolytic aluminum, ferroalloy and paper making.

"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, Nomura Securities' chief economist for China, said in a note.

"This reinforces our view that aggressive policy stimulus is unlikely in 2013 and growth should trend down," Zhang said.

The broker predicted China's gross domestic product growth would moderate to 7.4 percent in the third quarter and 7.2 percent in the fourth quarter. GDP growth slowed to 7.5 percent in the April-June period.

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 Ltd, a Fujian-based paper manufacturer, lost 1.5 percent to 3.91 yuan as the firm has to reduce 30,000 tons of production capacity.

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

Agricultural Bank Of China Ltd fell 1.2 percent to 2.48 yuan.

China CITIC Bank Corp fell 1.1 percent to close at 3.48 yuan.