Investors check share prices at a brokerage in Haikou, Hainan province, on April 27, 2015. [Photo/China Daily]

Chinese stocks tumbled on Tuesday, with the benchmark Shanghai index losing 4.1 percent, its biggest retreat since January, on fears that new initial public offerings might drain market liquidity.

The Shanghai Composite Index dived 181.76 points, closing at 4,298.71, while the Shenzhen Component Index slid 4.2 percent to 14,233.1.

Twenty-nine industry measures edged downwards, led by the steel, utility and banking sectors.

Huaxia Bank, Beijing Bank and CITIC Bank slid more than 5 percent while Merchants Securities and Huatai Securities dropped 5 and 3.3 percent respectively.

Steel shares plunged as Maashan Iron Steel and Angang Steep Co fell 8 percent, followed by Chongqing Steel, Wuhan Iron Steel and Inner Mongolia Baotou Steel Union that slid more than 7 percent.

The Shanghai property measure declined from a record high, losing 7.3 percent and paring a rally over the past month to 26 percent, according to Bloomberg. Poly Real Estate Group slumped 7 percent.

China National Petroleum Corp and Sinopec Group, the country's State-owned oil giants, fell 3.6 and 2.9 percent respectively following the leadership reshuffles. Both companies' chairmen Zhou Jiping and Fu Chengyu have retired.

Wang Yupu, deputy head of the Chinese Academy of Engineering, will chair China National Petroleum Corp and Wang Yilin, former chairman of China National Offshore Oil Corp, will replace Fu as chairman of Sinopec.

The CSI 300 edged down 4 percent, closing at 4,596.86 points.