Chinese equities closed down 2.98 percent on Friday with banks and other heavyweights leading the fall.

The benchmark Shanghai Composite Index dipped 2.98 percent, or 93.59 points, to finish at 3,046.97. The Shenzhen Component Index slumped 2.37 percent, or 303.16 points, to close at 12,499.75.

Combined turnover rose to 227.67 billion yuan ($33.33 billion) from 206.76 billion yuan on the previous trading day.

The Shanghai Composite Index slumped 6.55 percent this week, the second largest drop this year.

Losers outnumbered gainers by 798 to 74 in Shanghai and 702 to 52 in Shenzhen.

Financial shares dropped remarkably. The Bank of Communications dipped 3.64 percent, Industrial and Commercial Bank of China slumped 3.21 percent and Bank of China dived 3.03 percent.

Analysts said financial shares went down after the China Merchants Bank said Friday it planned to raise up to 18 billion yuan ($2.6 billion) via a rights issue in Shanghai and Hong Kong, aimed at strengthening its capital base. The bank's stocks dropped 2.38 percent in Shanghai.

Shares of China National Petroleum Corp (CNPC), the country's largest oil and gas producer, dropped 2.11 percent and shares of China Petrochemical (Sinopec) dropped 1.07 percent.

China's oil imports jumped 18 percent to 19.6 million tons in July from a month ago, a record high attributed to strong domestic demand, said figures from the General Administration of Customs released Tuesday.

Figures published this week showed July's new yuan lending fell sharply to 355.9 billion yuan ($52 billion) from 1.53 trillion yuan in June.

Analysts said the markets have raised investor worries monetary policy would be tightened in the second half of the year although the Chinese government reiterated it would adhere to moderate policies.