Beijing - China's biggest stock market followed global losses with a 3-percent plunge on Wednesday, led by falls in banking and real-estate shares.

The key Shanghai Composite Index, which tracks shares traded in local and foreign currencies, lost 2.90 per cent to end the day at a 22-month low of 1,929.05 points.

The smaller Shenzhen Composite Index fell by 1.89 per cent to close at 559.95 points.

The Bank of China and China Merchants Bank both lost heavily amid reports that they held bonds valued at 50 million dollars and 70 million dollars, respectively, in the bankrupt US investment firm Lehman Brothers, the Shanghai Daily newspaper said.

"Concern has grown that more domestic banks will be involved in the shock wave of the United States credit crisis," the newspaper quoted analyst Wang Fen of the Shanghai Securities Company as saying.

The Chinese banks also face new pressure from a cut in the base lending rates by the central bank, the newspaper said. (dpa)