China's banking regulator said late Friday it will expand the Qualified Domestic Institutional Investor program to allow approved banks to invest in overseas stocks and equity-linked structured products on behalf of clients, on top of fixed-income products.

Among decliners, China Mobile (Hong Kong) Ltd. dropped 0.7 percent to HK$73.25 after the previous day's gains.

Index heavyweight HSBC fell 0.3 percent to HK$146.4, after its U.S units posted a drop in first-quarter earnings due to higher impairment charges.

Investor enthusiasm in Hong Kong and the mainland also was weighed down by comments issued late Friday by the securities regulator, the China Securities Regulatory Commission, urging its local branches and dealers to educate investors on the risks of investing in shares.

The notice, also reported Tuesday by the state-run newspaper Securities Times, prompted some panic selling in mainland markets, analysts said.

Shanghai's Composite Index closed at 3,900.56, down 3.6 percent. The Shenzhen Composite Index fell 2.6 percent to 1,097.94.

But mid-sized Bank of Communications surged 71 percent in its Shanghai debut.

In currencies, the US dollar was trading at 120.32 yen mid-Tuesday, up from 120.29 yen late Monday in New York. The euro remained unchanged at US$1.3541.

Elsewhere:

BANGKOK: Thai shares rose 0.2 percent at 713.27 in thin trade, with Land & Houses' slide offset by gains in select stocks.

JAKARTA: Indonesian shares closed 0.3 percent lower at 2,037.78 as profit-taking in most other regional markets also hit local shares, although bargain-hunting by local investors slowed the market's slide.

KUALA LUMPUR: Malaysian shares fell on widespread selling, dragged down by regional losses. The Kuala Lumpur Composite Index of 100 blue chips lost 1 percent to 1,346.10 points.

MANILA: Philippine shares surged to their highest level in 10 years, lifted by relatively smooth midterm elections. The benchmark 30-company Philippine Stock Exchange Index advanced 44.12 points, or 1.3 percent, at 3,408.73.

MUMBAI: Indian shares ended lower after crossing the 14,000 mark intraday, dragged back by software stocks hurt by fears that the rupee is unlikely to depreciate against the US dollar soon, and by heavyweight Oil and Natural Gas Corp., which fell on profit taking. The 30-stock Sensex lost 36.53 points, or 0.26 percent, to end at 13,929.33, tracking regional markets.

SEOUL: South Korean shares fell, led lower by a sell-off of shipbuilders' stocks and snapping a run of four record high closes. The Korea Composite Stock Price Index fell 16.40 points, or 1 percent, to 1,589.37.

SINGAPORE: Singapore's shares fell on a slow earnings day and concerns over the possibility of economic tightening moves by China. The benchmark Straits Times index retreated 0.74 percent, or 26 points, to 3,475.10.

SYDNEY: Australian stocks slipped as weaker prices for base metals pulled back major miners. The benchmark S&P/ASX200 index fell 53.9 points, or 0.9 percent, to 6,291.2, while the All Ordinaries index lost 49.4 points to 6,297.3.

TAIPEI: Taiwanese shares dropped amid a lack of clear signals about the island's ties with rival China and worries about a possible correction in international markets after recent gains. The Weighted Price Index of the Taiwan Stock Exchange fell 55.53 points, or 0.7 percent, to close at 7,975.03 points.

WELLINGTON: New Zealand's stocks slipped, as a number of top stocks came in for profit-taking, outweighing a series of positive earnings reports. The benchmark NZX-50 index fell 24.2 points, or 0.6 percent, to 4,214.78.

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