The Shanghai Composite Index lost 10.61 points, or 0.4 percent, to close at 2,637.5. The Shenzhen Composite Index for China's smaller second exchange slipped 0.1 percent to 1,075.45.

“It was a normal decline, because the market needed a correction after a long rally,” said Cai --iang, an analyst for Sinolink Securities in the western city of Chengdu.

Cai said prices might fall further in August on worries that Everbright Bank Ltd.'s planned initial public offering will flood the market.

Agricultural Bank of China Ltd. shed 1.4 percent to 2.79 yuan, while Industrial & Commercial Bank of China Ltd., China's biggest commercial lender, slipped 1.2 percent to 4.31 yuan. Bank of China Ltd. dropped 0.8 percent to 3.58 yuan.

In currency markets, the yuan strengthened to 6.7734 to the U.S. dollar, up from Thursday's close of 6.7765.