The combined turnover of China's stock markets shrank on Friday as investors continued to worry about possible government moves to rein in excessive liquidity.

Total turnover of the two exchange markets fell to 84.4 billion yuan (11 billion U.S. dollars) on Friday, one of the lowest daily volumes since May. Daily turnover has hovered around the 100 billion yuan mark this week, compared to the daily level of more than 200 billion yuan in May.

The benchmark Shanghai Composite Index, which covers A- and B- shares listed on the Shanghai Stock Exchange, dropped 1.59 points, or 0.04 percent, to 3914.40 points.

"With more than ten trillion yuan of share capital locked up in the markets, turnover can no longer expand quickly," said Zhong Jian, an analyst with Orient Securities.

The State Administration of Foreign Exchange announced on Thursday it would step up monitoring of speculative funds, a day after the central bank reported that the country's already massive forex reserves had hit a new high of 1.3 trillion U.S. dollars at the end of June.

"In the short run, the tougher policy on speculative funds will put a damper on the market, but the market will benefit in the long term," said Zhong.

The effects of SAFE's policy were felt on the U.S. dollar-dominated Shanghai B-Share index, which dipped 0.22 percent to 279.29 points, compared to the 7.8 percent surge on Thursday.

The HK dollar-dominated Shenzhen B-Share Index climbed 0.88 percent to 719.39 points, after rising 2.8 percent on Thursday.

Heavyweight financial stocks fell comprehensively on Friday with the Industrial and Commercial Bank of China down 0.37 percent to 5.37 yuan and the Bank of China down 0.77 percent to 5.13 yuan.

Fujian-based Industrial Bank, however, climbed 0.13 percent.

The Chinese currency stood at 7.5731 yuan to one U.S. dollar on July 13, up slightly but still lower than the record high of 7.5712 yuan on Wednesday.