SHANGHAI, May 31 -- Chinese shares plunged yesterday, suffering their biggest loss in three months after the government tripled the tax on stock trading in a bid to apply the brakes to the recent rollercoaster rally.

The tumble had a fallout effect in most regions of Asia.

The Shanghai Composite Index, which groups both yuan-denominated A shares and the hard-currency B chips, slumped 6.50 percent to 4,053.09 yesterday, the largest single-day loss since February 27.

Turnover reached 276 billion yuan (US$36.09 billion), up from 251 billion yuan on Tuesday.

The A-share index dived 6.48 percent to 4,250.00, while the B-share index dropped 9.01 percent to 302.95.

The Shenzhen Composite Index, which tracks the smaller exchange on China's mainland, fell 7.19 percent to 1,199.45. Among other Asian benchmarks, the Nikkei 225 Index eased 0.48 percent to finish at 17,588.26 points on the Tokyo Stock Exchange. The Hang Seng Index in Hong Kong closed down 0.86 percent at 20,293.76.

The Morgan Stanley Capital International Asia-Pacific Index slid 0.6 percent to 148.24 in Tokyo last night.

South Korea, Sri Lanka and Thailand all bucked the trend by recording rises.

"Corrections are coming and I've unloaded some shares to wait for further opportunities," said Cheng Xiaomei, a Shanghai retail investor.

Cheng's sentiments were echoed by other retail investors who foresee short-term corrections.

Some saw yesterday's plunge as just a brief break in a bull market and were confident about rebounds within days. But most said they will play safer due to both the continual gains and the higher stamp duty.

The Ministry of Finance increased the stamp duty on share trading to 0.3 percent from 0.1 percent, effective yesterday. The move was aimed to "promote the healthy development of the securities market," the ministry said on its Website on Tuesday night.

The tax increase came on the heels of another interest rate rise this month - the second since March - to encourage savings and mop up liquidity.

The number of accounts at brokerages exceeded 100 million for the first time this week, according to China Securities Depository & Clearing Corp. About 22 million accounts have been opened so far this year.

The buying frenzy has worried senior government officials, former United States Federal Reserve Chairman Alan Greenspan, Asia's richest man Li Ka-shing and many economists, most of whom predict imminent corrections.

"The slump indicates the start of short-term corrections and investors should put more focus on well-performing companies to avoid risks," said Hao Guomei, an analyst at Huatai Securities Co.

In yesterday's trading, about 860 stocks dived by the 10-percent daily fluctuation limit in Shanghai and Shenzhen. Among them were Citic Securities Co, China's largest publicly traded broker, which tumbled 10 percent to 57.60 yuan.