Chinese shares slumped sharply on Tuesday, with the major Shanghai index down 8.84 percent, the biggest daily drop in 10 years. Analysts blame profit taking for the dramatic drop.

The benchmark Shanghai Composite Index, which covers both A- and B-shares, plunged 8.84 percent to closed at 2,771.79 points, the biggest daily dive since Feb. 18 in 1997 when the index dropped 8.91 percent.

The component index of the smaller Shenzhen Stock Exchange lost 9.29 percent, or 797.87 points to end at 7,790.82 points. Turnover on the two bourses totaled 198.9 billion yuan (24.8 billion U.S. dollars).

Share prices, 1,263 of the country's 1,400 domestically listed companies, were down. More than 900 stocks plunged to the allowable limit of 10 percent, while only 57 posted gains.

Market heavyweights declined, with shares of the Industrial and Commercial Bank of China sliding 8.04 percent to 4.69 yuan and that of the Bank of China falling 7.23 percent to 4.62 yuan.

China Life, the country's biggest life insurer, lost 9.02 percent to close at 33.89 yuan.

Banking shares experienced heavy loses after the People's Bank of China, the country's central bank, raised the required reserve ratio for financial institutions engaging in deposit business by 0.5 percentage points to 10 percent on Sunday.

Share prices of China Petroleum and Chemical Corporation, known as Sinopec, slid 10 percent, the daily maximum, after crude oil prices hit a two-month high on Monday following higher demand for heating oil was boosted by a winter storm in the United States.

Light sweet crude for April delivery was up 25 cents to 61.39 U.S. dollars on the New York Mercantile Exchange, the highest close since Dec. 22.

"As the indices stand at unprecedented highs, the risks are also piled high," said securities analyst Qiu Yanying, who believes the slump is a regular market adjustment.

Chinese shares climbed to a new high Monday, the first day of trading in the Year of Pig, as the benchmark Shanghai Composite Index gained 42.13 points to closed at 3,040.60 points.

"China's Bull market is based on continuing economic development and corporate profit growth, so the stocks will not slump further," said Zhao Jianxing, a stock analyst with China Merchants Securities.

"Investors should be optimistic,"Shenyin & Wangguo Securities told Xinhua. "The bull market trend remains."