SHANGHAI (AP) — China's main stock index sank 6.7 percent yesterday on heavy selling of market heavyweights triggered by renewed worries banks will cut back on the lavish lending that spurred frenzied gains until earlier this month.

The benchmark Shanghai Composite Index lost 192.94 points yesterday to 2,667.75, its lowest close in more than three months.

The Shenzhen Composite Index of China's second, smaller exchange tumbled 7.2 percent to 904.14.

Investors began selling heavily last week on concerns that banks will cut back on the lavish lending that had helped push shares up more than 80 percent by early August.

Bank lending in August declined further following July's sharp fall from the previous month, state media reports say.

Further discouraging buying sentiment, last week the government said it will try to curb overcapacity and excessive investment in industries including steel and cement — a possible side effect of its massive stimulus plan.

Economists say such measures are merely aimed at fine-tuning and balancing growth that has been driven largely by government-backed stimulus spending. But they did not sit well with China's hypersensitive investors.

"Investors were a bit over-positive a month ago, and now they've turned a bit overly pessimistic," said Peng Yunliang, an analyst at Shanghai Securities in Shanghai.

Major refiner China Petroleum & Chemical Corp. fell by the daily maximum 10 percent to 11.13 yuan after the company said it does not expect to significantly boost production, while PetroChina, the Shanghai index's heaviest weighted share, fell 6.7 percent to 12.83 yuan.

Concerns that a slew of initial public offerings might glut the market with new shares are also hurting prices, said Zhai Peng, an analyst at Guotai Junan Securities in Shanghai.

"Investors believe it is impossible to make a profit from market trading in the short-term," Zhai said. "Fewer and fewer investors dare to step into the market," he said.

While first-half corporate earnings remained relatively weak, many companies reported improved performance in the second quarter, when economic growth rebounded to 7.9 percent from the previous quarter's 6.1 percent.

Chinese share prices rose more than 80 percent earlier this year before falling back in mid-August. The months-long rally coincided with an unprecedented flood of bank lending aimed at fighting off the economic downturn.