China stocks fell more than 1 percent on Thursday, led by resources shares, after state media reported that 35 domestic brokerages have resumed short-selling business following a long hiatus.
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Major indexes had their biggest one-day fall in two weeks, with the blue-chip CSI300 index declining 1.7 percent to 3,181.85 points, and the Shanghai Composite Index sliding 1.6 percent to 2,960.97.
Stocks fell across with board, with energy and raw material shares among the biggest decliners.
Many Chinese financial institutions voluntarily halted margin lending and stock shorting activities during China's mid-2015 stock market crash, in response to heavy pressure from Beijing.
Analysts say that on resumption, the volume of the business, which allows investors to sell borrowed stocks and profit from price declines, is expected to be negligible.
But the move could have a psychological impact on a market which is facing increasing selling pressure following a robust rebound.
China's main indexes have gained more than 10 percent over the last month but several attempted rallies since last summer's slump have proved short-lived.
(Reporting by the Shanghai Newsroom; Editing by Kim Coghill)