SHANGHAI, July 14 (Reuters) - China's key share indexes fell on Tuesday, following three days of rebound, as a sharp correction in blue chips offset gains in small caps.
But there were few signs of panic selling - the kind of desperate mood seen in the recent rout - with many stocks ending the session in positive territory, even as hundreds of companies resumed share trading, and regulators launched a fresh crackdown on grey-market margin financing.
"Today's correction, following previous days' strong rebound, is natural," said Gu Yongtao, analyst at Cinda Securities.
"It's different from the panic selling we saw previously, when liquidity dried up and investors couldn't sell their shares."
He said corrections are needed for a solid bottom, while the government is unlikely to intervene again as long as market sentiment remains calm.
The CSI300 index of the largest listed companies in Shanghai and Shenzhen fell 2.4 percent, to 4,112.15, while the Shanghai Composite Index lost 1.1 percent, to 3,924.49 points.
The key indexes were dragged lower by banking heavyweights , major steelmakers and oil giant PetroChina .
But small caps extended gains. Shenzhen's start-up board ChiNext jumped 2.6 percent, while the CSI500 index tracking China's 500 small companies gained 2.1 percent.
Renewed buying interest prompted hundreds of listed firms, mostly small caps, to resume trading after many suspended shares during the market rout.
On Tuesday, more than 250 companies restarted trading, following about 350 resumptions on Monday.
Shares of Hundsun Technologies Inc, the financial information technology company controlled by Alibaba Group Holding Ltd founder Jack Ma, surged by the 10 daily limit, despite an investigation by regulators into its role in unregulated margin financing. (Reporting by Samuel Shen and Pete Sweeney; Editing by Richard Borsuk)