SHANGHAI stocks fell in choppy trading today after the key index hit a four-year low as fears grew over a liquidity crunch.

The benchmark Shanghai Composite Index fell 0.19 percent to settle at 1,959.51 points. Daily turnover was 104.7 billion yuan (US$17.2 billion).

The barometer yesterday plunged 5.3 percent, its biggest daily loss in nearly four years, after the Chinese central bank signaled not to bail financial institutions out of the ongoing liquidity squeeze.

"The market recovered as negatives have been priced in shares after big falls," said Yi Wenbin, analyst with Huatai Securities.

"The index may go through a technical rebound, but the bounce will be limited without a policy support," Yi said.

Most lenders crawled back into positive territory. China Industrial Bank added 0.3 percent after tumbling 7.6 percent. Shanghai Pudong Development Bank Co reversed an early loss of 5.7 percent and gained 3.72 percent to 7.80 yuan.

Brokerages declined. CITIC Securities, China's biggest securities brokerage, shed 0.9 percent to 10 yuan. Everbright Securities dropped 4.2 percent to 9.74 yuan. Founder Securities lost 2.9 percent to 5.72 yuan.