Chinese stocks were mixed on Friday after Beijing denied reports that it was studying a proposal to permit swaps of shares listed in both the domestic stock market and Hong Kong.
The Shanghai Composite Index, which tumbled 3.50 percent on Thursday in response to the reports, rose as much as 1.83 percent in the opening minutes on Friday because of the denial.
But the rebound soon ran out of steam, showing many investors believed the market was vulnerable to a pull-back for other reasons. After 20 minutes of trade, the index was down 0.10 percent at 5,819.593 points.
A swap scheme could drag down the prices of domestic shares by shrinking the big premiums, now averaging nearly 50 percent, of A shares over Hong Kong-listed H shares.
After the market closed on Thursday, a spokesman for the China Securities Regulatory Commission said it was not considering such a plan, and that the reports were the result of misunderstanding comments by deputy CSRC chief Tu Guangshao.
But with the index having more than doubled this year, investors are increasingly concerned about other factors including tightening monetary policy, and some expect an interest rate hike as soon as after the market's close on Friday.
Many analysts believe that regardless of whether authorities adopt a swap scheme, the government wants to cool the stock market's bull run, and may take stronger action after this week's Communist Party leadership congress.
Even before the swap reports surfaced, some traders thought profit-taking might push the index down to technical support in the 5,500 to 5,600 area, where it briefly peaked in late September.