Major Chinese stock indices Friday continued substantial downward adjustments that begun Thursday, with market mood remaining in doldrums on government decisions to rein in excess liquidity.

The benchmark Shanghai Composite Index fell 93.5 points, or 2.39 percent, to close at 3,820.7 points on a daily transaction volume of 107.15 billion yuan (14.1 billion U.S. dollars), which shrank 22.6 billion yuan from the previous day.

The key index peaked at 3,919.34 points and bottomed at 3,779.81 points.

The Component Index on the Shenzhen Stock Exchange moved down 335.73 points, or 2.61 percent, to end the day at 12,546.45 points with a turnover of 60.9 billion yuan (8.01 billion dollars), which declined 5.1 billion yuan.

However, B-shares on the Shenzhen bourse edged up 43.87 points, or 0.82 percent to close at 5,380.97 points.

News that came on Wednesday released strong signals for the central government to rein in excess liquidity.

National legislators convened Wednesday to discuss whether the current deposit interest rates should be suspended or slashed. The move was seen by the markets as an incentive for saving instead of investment.

On Friday the lawmakers agreed to authorize the State Council, or the cabinet, to make decision on the issue.

On Wednesday, the lawmakers also began discussing a draft bill authorizing the Ministry of Finance to issue 1.55 trillion yuan of special treasury bonds that will be used to purchase 200 billion dollars of foreign exchange.

This was considered another measure to diminish liquidity, which analysts believed affected the equity markets more heavily and was the decisive factor behind the continuous bearish run for two consecutive days.

The analysts said since special T-bonds will be sold to the general public, they were bound to help divert money away from the stock markets.

On Friday, petrochemical, telecom, financial, steel and other heavyweight sectors tended to recover more or less from Thursday with marginal drops. Some heavyweight shares even managed to rise somehow.

The Industrial and Commercial Bank went down 0.4 percent to 5.01 yuan, Sinopec, China's largest oil refiner, was down 1.05 percent to 13.22 yuan, the Bank of China rose 0.2 percent to 5.02 yuan and China Unicom, a leading Chinese telecom operator, up 1.91 percent to 5.87 yuan.

The Hushen 300 Index, which tracks 300 companies on the Shanghai and Shenzhen stock exchanges, closed at 3,801 points, down 57.52 points, or 1.49 percent, from the previous close.