Beijing  - Shares on China's largest stock market lost nearly 4 per cent of their value on Friday, plunging to the lowest point for more than one year, as analysts blamed panic selling.

The key Shanghai Composite Index, which tracks shares traded in both local and foreign currencies, fell 128.07 points to end the day at 3,094.67, down 3.97 per cent.

The smaller Shenzhen Component Index also lost more than 3 per cent on Friday, as state media quoted analysts as saying a plunge in PetroChina shares had sparked panic selling in the two markets.

Market sentiment was also hit by reports that five investment funds had cut the share of stock market holdings in their total capital investments in the first quarter of the year, the official Xinhua news agency quoted analysts as saying.

The Shanghai index closed on Friday at 49.5 per cent below the record high of 6,124.04 in October.

The Chinese markets was likely to continue weak performance in the short term, analyst Hong Yanhua at Chengdu Huiyang Investment Consulting told the agency.

Other observers believed the markets were close to bottoming out after a recent slump and were likely to rebound soon, the agency said. (dpa)