Chinese stocks tumbled Wednesday, with the benchmark Shanghai Composite Index shedding 5.5 percent as jittery investors unloaded shares in an afternoon sell-off.

The 198.63-point decline in the Shanghai index, to 3,413.91, capped a three-day streak of advances that brought share prices back from one-year lows hit last week.

Market heavyweight PetroChina helped drag the index lower, dropping 4.8 percent to 17.32 yuan.

Financials also fell sharply following recent gains. Industrial & Commercial Bank of China fell 4.6 percent to 6.01 yuan. Shanghai Pudong Development Bank fell 7.8 percent to 34.43 yuan. Bank of China fell 3.9 percent to 4.99 yuan.

Mutual funds were selling holdings in companies with large capitalizations on worries about how their earnings would be affected by a weak global economic outlook and weakness in U.S. shares, analysts said.

"The last few days' gains were just a technical rebound," said Zhai Peng, a strategist at Guotai and Junan Securities in Shanghai. "Worries over first quarter profits haven't dissipated," he said.

Renewed worries about a sharp increase in the number of shares in the market also weighed on sentiment. The pending expiry of lockup periods for institutional holdings is expected to bring a flood of newly tradable shares onto Chinese exchanges.

According to investment bank Morgan Stanley, an estimated 1.6 trillion yuan (US$228.6 billion; €145 billion) worth of shares held by institutional investors will be freed from lockup periods this year.

Steel maker Baoshan Iron and Steel fell 2.9 percent to 12.00 yuan. Ping An Insurance dropped 7.1 percent to 57.12 yuan.

Leading aluminum maker Aluminum Corp. of China sank 6.2 percent to 21.73 yuan.