Mainland stocks fell for the fourth time in five days as concern Spain's bailout plan won't be enough to tame Europe's debt crisis overshadowed higher-than-estimated new Chinese bank loans.

China Shenhua Energy Co, the largest coal producer, led a gauge of energy producers to the biggest drop among industry groups on concern Europe's economic problems may slow global growth.

Spanish and Italian bond yields surged on Monday as investors turned their attention to debt auctions in Italy this week and elections on Sunday that may determine whether Greece stays in the euro.

"The European debt crisis is the biggest risk to the stock market now and will cut investors' risk appetite," said Wang Weijun, a strategist at Zheshang Securities Co in Shanghai. "It looks like the problem is spreading to bigger countries such as Spain and Italy, which is the last thing investors want to see."

The Shanghai Composite Index dropped 16.07 points, or 0.7 percent, to 2,289.79 at the close, with 30-day volatility at 14.73, the lowest since June 1. The CSI 300 Index fell 0.7 percent to 2,540.18.

Even with Tuesday's drop, the Shanghai index has advanced 4.1 percent this year on expectations the government will increase spending on infrastructure and ease monetary policies to spur growth.

The Shanghai Composite gained the most in almost two weeks on Monday after China's trade expanded in May and inflation slowed.

BNP Paribas SA cut its estimates for Chinese bank profits and margins after China lowered interest rates last week. Lenders will be able to offer deposit rates by up to 10 percent more than the benchmark, wrote Dorris Chen, head of China research at BNP Paribas, in a note on Monday. Profit estimates were cut by an average of 1.3 percent this year and 6.1 percent next year, Chen wrote.

China Construction Bank Corp, the country's second-largest bank, slid 0.7 percent to 4.42 yuan (69 cents). Bank of China Ltd dropped 0.3 percent to 3.01 yuan.

Local-currency loans were 793.2 billion yuan ($125 billion), the People's Bank of China said on Monday. M2 money supply grew 13.2 percent last month from a year earlier, compared with an estimate of 12.9 percent.

The loan data bolstered the outlook for developers, which jumped 1.8 percent as a group on the Shanghai Composite. Poly Real Estate Group Co, the second-biggest developer, climbed 4 percent to 14.63 yuan.

"There's a lot weighing on investors' minds beside Chinese growth figures, even though the import and export numbers were positive," said Christopher Palmer, director of global emerging markets for Henderson Global Investors Ltd.

"Investors are still hesitant to commit to China having been told that things were OK in Europe, which is its biggest trading partner, and now finding out that Spain needs a bailout."