Bearish sentiment about the property market and the falling value of the yuan drove China's benchmark stock index to its biggest slump in five months on Tuesday.

The Shanghai Composite Index dropped by 2 percent to 2,034 at the close, extending a four-day retreat to 5.1 percent, while turnover expanded to 127.8 billion yuan ($21 billion) from 107.2 billion yuan on Monday.

Analysts said sentiment has continued to deteriorate on negative news from the real estate sector, which put heavy pressure on property shares. More than 20 property shares traded below book value on Tuesday. News reports have been circulating since the weekend that some banks will tighten loans for property projects until the end of March, fueling speculation that a weaker housing market will erode demand for everything from electric appliances to cars.