China's equities closed slightly lower, as the benchmark index slid down 0.71 percent at Thursday's close, in the wake of the government's move to curb overcapacity.

The benchmark Shanghai Composite Index lost 21.20 points to finish at 2,946.4. The Shenzhen Component Index fell 0.81 percent, or 97.29 points, to end at 11,897.74.

Combined turnover expanded to 231.60 billion yuan (33.90 billion U.S. dollars) from 227.73 billion yuan on the previous trading day.

Gainers outnumbered losers by 575 to 280 in Shanghai and 490 to 250 in Shenzhen.

The benchmark index opened lower in the morning, driven up by banking shares to approach 3,000. It tumbled to 2,910.3 at 1:40 p.m., led by poor performances from the heavyweights.

Medicine stocks showed strong gains with 18 companies rising by the daily limit. Yabao Pharmaceutical Group Co., the Shanxi-based medicine producer, surged 9.08 percent to close at 14.29 yuan. Anhui Bbca Biochemical Co. advanced 6.99 percent to 6.58 yuan.

Coal and oil shares posted widespread losses following restraints on coal, glass and power industries targeting overcapacity.

Shanxi-based coal giant Datong Coal Industry Co. tumbled 3.59 percent to 37.05 yuan. China Petrochemical Corporation (Sinopec), Asia's biggest oil refiner, slid 2.92 percent to 13.05 yuan.

China's State Council, the Cabinet, warned Wednesday of overcapacity in emerging sectors such as wind power, saying the country would move to "guide" development troubled by overcapacity and redundant projects.

The guidance will be particularly applied to the development of steel, cement, plate glass, coal chemical, polysilicon, and wind power sectors.

Steel producers added 0.24 percent despite looming restraints on steel and cement output. Nanjing Iron and Steel Co. added 8.39 percent to 6.59 yuan. Baosteel Group Co., the country's largest steelmaker, advanced 0.28 percent to 7.17 yuan.

(Xinhua News Agency August 27, 2009)