China stocks fell on Friday morning, dragged by financial heavyweights, after the country's securities regulator said it would accelerate approval of initial public offerings in an apparent effort to cool the red hot market.

Late on Thursday, the China Securities Regulatory Commission (CSRC) approved a new batch of 25 IPOs, and said it would publish two lists of approved IPOs each month, up from one currently.

This shows that "regulators are concerned with the pace of the current market rally," said Xiao Shijun, analyst at Guodu Securities in Beijing. "It will bring some short-term pressure to the market."

But it doesn't mean China's bull market is over, said David Dai, Shanghai-based investment director at Nanhai Fund Management Co.

"Any correction at this stage would be natural. Regulators want to see a long and steady bull market, but recently, the market has shown signs of over-heating."

The CSI300 index fell 2.3 per cent, to 4,630.79 points at the end of the morning session, having gained 0.8 per cent so far this week. The Shanghai Composite Index lost 1.8 per cent, to 4,336.76 points, bringing this week's gain to 1.2 per cent.

Both indexes have surged about 80 per cent over the past six months and repeatedly hit fresh seven-year highs in recent sessions.

But Shenzhen's start-up board ChiNext fell less than the main indexes, down 1.2 per cent by midday after touching fresh record highs in early trade, as investors took some encouragement from its US counterpart the Nasdaq Composite . Nasdaq closed at an all-time high on Thursday, surpassing a 2000 record set just before the dotcom crash.

Hong Kong stocks followed mainland markets lower. The Hang Seng index dropped 0.7 per cent, to 27,635.95 points, while the Hong Kong China Enterprises Index lost 2.0 percent, to 14,185.87.

"In the short term, Hong Kong stocks are vulnerable to the mood in mainland markets," brokerage China Investment Securities said in a note to clients on Friday. "But with money flowing in and the Hong Kong dollar holding strong, the market is still in an upward trend."

China's CSI300 Banking Index slumped 3.7 percent.

But bucking the trend, most of the 23 listed units of Aviation Industry Corp of China (AVIC) rose, after it partnered with the Shanghai Stock Exchange to allow its listed units to have easier access to capital markets.

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