Mainland shares decline most in two months, paring November gains

Mainland stocks fell the most in two months, amid concerns liquidity may tighten and as a technical indicator suggested the mainland market is overheating.

The Shanghai Composite Index fell 1 percent at the close, paring this month's rise to 4.8 percent. Yanzhou Coal Mining Co led a gauge of energy companies lower on the CSI 300 Index, while Jiangxi Copper Co, Aluminum Corp of China Ltd and Angang Steel Co each dropped more than 3.3 percent. Industrial commodities such as steel and iron ore extended Tuesday's slump. The Shanghai equity benchmark's 14-day relative strength index on Tuesday was at its highest level since May 2015 and above the threshold some traders consider as being overbought.

China's interest-rate swaps are heading for the biggest monthly increase in two years on speculation that rising inflation and the authorities' plan to curb excessive borrowing will drive money rates higher. The People's Bank of China continues to use longer term reverse-repurchase agreements in open-market operations, effectively raising the cost of funds injected into the financial system.