A notable drop was visible Thursday in Chinese shares on profit taking and government policy uncertainty. The markets were trading lower just before an annual economic planning meeting.

The biggest one day fall since 31st August was noticed in the benchmark Shanghai Composite Index, which was down by 119.19 points, or 3.6 percent, to close at 3,170.98. Furthermore, a plunge by 3.5 percent was seen in the Shenzhen Composite Index for China's smaller second exchange to 1,171.72. Zhang Qi, an analyst for Haitong Securities in Shanghai, said that since the beginning of November, Chinese shares had hiked by 9.8%.

Zhang added, "The market needed a breather because it attracted too much capital in previous sessions."

As per the reports from Chinese media, it will be from end of November (a month earlier than usual) when the policy meeting will take place.

The decline was led by the banks and nearly 3% to 5.17 yuan was lost by Industrial & Commercial Bank of China Ltd., China's biggest commercial lender. On the other hand, China Construction Bank Ltd fell 3.4 percent to 5.92 yuan, while Bank of China Ltd. dropped 3.5 percent to 4.13 yuan

In the earlier two sessions, steelmakers retreated. A drop by 6.6% to 8.34 yuan was seen in Baoshan Iron & Steel Co., China's biggest steel producer. Meanwhile, Inner Mongolia Baotou Steel Union Co. dropped by 5.9 percent to 4.95 yuan.

The yuan bolstered to 6.8266 to the U. S. dollar, in currency markets, from Wednesday's close of 6.8280.