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Chinese stocks continued to decline at the close of trading Tuesday, extending the previous day's sharp losses, with the Shanghai Stock Exchange's leading indicator, the Shanghai Composite Index 1.44 percent, or 42.09 points, settling at 2,886,431 points. The Shenzhen Component Index, which tracks stocks on China's second exchange, fell 1.66 percent, or 172.64 points, to end at 10,206.64 points.

The combined transaction value of shares covered by the second index reached 838.8 billion yuan (about 127.89 billion US dollars), down from 896.89 billion yuan (about 138.18 billion US dollars) on the previous trading day.

Stocks linked to securities firms and the textile and garment industry led the losses.

Meanwhile, the ChiNext index, which tracks emerging companies or start-ups on China's trendy Nasdaq board, traded 0.85 percent to end at 2,150.51 points.