[SHANGHAI] China's share indexes fell in early trade on Thursday, extending a slump from the previous session, on news that Chinese regulators are planning a clampdown on wealth management products to curb risks to the banking system.

Both the benchmark Shanghai composite index and the blue-chip CSI300 index opened 0.4 per cent weaker at 2,980.50 and 3,204.46 points, respectively China is considering rules to restrict investments by small banks in the US$3.5 trillion wealth management product (WMP) industry, draft rules seen by Reuters showed, as concerns grow that they are taking increasing risks.

The rules could include caps on investments by banks in equities and other "non-standard assets".

WMPs have been a strong source of revenue for banks and often offer investors juicy yields that are well above other investments.

China stocks closed sharply lower on Wednesday, with major indexes suffering their worst daily losses in six weeks, as investors sold off on worries that regulatory changes were coming.

REUTERS