Chinese shares plummeted on Friday, with the benchmark Shanghai Composite Index down 6.42 percent to finish at 4,478.36 points.The Shenzhen Component Index lost 6.03 percent to close at 15,725.47 points.

The major Shanghai index dived by 13 percent from the previous week, in the biggest weekly drop in seven years. Nearly one thousand shares on the two bourses slumped by the daily limit of 10 percent.

During Friday's trading, losers outnumbered winners by 903 to 25 in Shanghai, and by 1,295 to 96 in Shenzhen.

Combined turnover for the two bourses shrank to 1.29 trillion yuan (210.23 billion US dollars) from Thursday's 1.5 trillion yuan.

Stocks relating to nuclear power, transportation, medical care, online education, mobile games and reform of state-owned enterprises were the biggest losers.

Guangzhou Baiyun International Airport Company dived by the daily limit of 10 percent to close at 17.77 yuan per share. Shanghai Electric Group Company lost 9.98 percent to end at 17.23 yuan.

The ChiNext Index, tracking China's Nasdaq-style board of growth enterprises, dived 5.41 percent to end at 3,314.98 points.

Analysts attributed the plunge mainly to four factors. Firstly, new listings of stocks, especially large-cap shares have kept drawing money away from the market.

On Thursday, Chinese securities trader Guotai Junan Securities Co., Ltd. became the largest domestic IPO in nearly five years after launching on the Shanghai Stock Exchange. The company will sell up to 30.1 billion yuan (4.92 billion US dollars) at 19.71 yuan per share, according to its IPO prospectus filed with the Shanghai Stock Exchange on Tuesday.

Secondly, market regulator the China Securities Regulatory Commission (CSRC) last week banned illicit loans for stock purchases, and announced that margin trading outside the brokerage system would be strictly punished. It is estimated that the move will prevent around 500 billion yuan from entering the market.

Thirdly, companies need to settle their account balance and complete payment to banks in the middle of the year, resulting in a shortage of funds and hence the fall of the major index.

Last but not least, the stock market has posted dramatically large gains since the beginning of the year, with the ChiNext Board index rising 170-percent rise at its peak without a proper callback, until the current correction comes.

Analysts warned that the biggest threat to the market is the high-rate rise, and the current nosedive could help release accumulated risks.

The Chinese stock market has seen an impressive rebound since the second half of 2014 after being stuck in the doldrums for about six years.

The major Shanghai index closed at fresh seven-year highs for several consecutive days last month, before posting another nosedive on record turnover on May 28.

On June 5, the major Shanghai index surpassed the 5,000-point landmark for the first time in over seven years, jumping to 5,023.1 points.