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Chinese shares closed lower Friday, with the financial sector leading the decline.

The benchmark Shanghai Composite Index lost 1.39 percent to close at 2,598.87 points, while the Shenzhen Component Index closed 0.64 percent lower at 7,648.55 points.

Combined turnover on the two bourses stood at 274.29 billion yuan (about 39.56 billion U.S. dollars), down from 296.58 billion yuan the previous trading day.

Financial shares, shares of commercial banks, in particular, fell the most on Friday, with the sub-index down 1.6 percent. The China Merchants Bank slumped 4.7 percent to end at 28.6 yuan. Agricultural Bank of China lost 3.69 percent to 3.65 yuan.

Bucking the downward trend, the paper making industry saw a 1.95-percent sub-index increase. Two Zhejiang-based companies, the Minfeng Special Paper Co., Ltd and the paper recycler Jingxing Paper Joint Stock Co., Ltd both rose by the daily limit of 10 percent to end at 6.82 yuan and 3.6 yuan respectively.

Shares of venture capital-related firms stretched their gaining streak throughout the week, with a sub-index increase of 0.64 percent on Friday. Shanghai-based Shibei Hi-Tech Co. climbed by the daily limit of 10 percent for the fourth consecutive day to 5.68 yuan, gaining 61 percent in the week.

The ChiNext Index, China's NASDAQ-style board, lost 0.51 percent to close at 1,322.83 points.