A concerned Chinese investor is pictured in front of a screen displaying prices of shares (green for price falling) at a stock brokerage house in Nantong city, East China's Jiangsu province, June 18, 2015. [Photo / IC]

China's stocks dived for a third day this week, with the benchmark Shanghai index sliding from seven-year high, amid concern that a flood of new offerings might drain liquidity of existing equities.

The Shanghai Composite Index closed at 4,785.36 on Thursday, down 3.7 percent, while the Shenzhen Component Index tumbled nearly 3.9 percent to 16,734.84.

Guotai Junan Securities, China's second-largest brokerage by asset scale, started selling shares. The $4.8 billion offering marks the nation's biggest initial public offering since 2010.

Brokerages led the decline on Thursday, as West Securities sank by 9.2 percent and Orient Securities by 7.9 percent. Huatai Securities lost 7 percent.

Subscriptions for 25 IPOs starting Wednesday may tie up at least 6 trillion yuan ($970 billion) of capital, said analysts.

Bank of Communications slid 9.7 percent after announcing its plan to introduce private capital and deepen mixed ownership reform. Everbright Bank and CITIC Bank slumped more than 6 percent.

PetroChina and Sinopec, the country's two major energy magnets, edged down 3.9 and 3.7 percent respectively.

The real estate industry gauge dropped 2 percent despite that latest data revealed signs of slight recovery in May, as 20 out of 70 large- and medium-sized cities surveyed saw an increase on new home price, up from 18 in April, while 43 reporting month-on-month price decline, according to the National Bureau of Statistics.

The CSI 300 Index tumbled 4.1 percent and closed at 4,930.55.