Mumbai, April 2 -- Chinese stock markets declined on Thursday, with the Shanghai Composite falling 0.7% to close at 3,919 and the Shenzhen Component dropping 1.6% to 13,487. The weakness followed broader losses across Asian markets as investor sentiment turned cautious.

Markets reacted to mixed signals from US President Donald Trump regarding the Middle East situation. While he suggested that the conflict in Iran could be nearing its end, he also warned that military action might still escalate, creating uncertainty for investors.

At the same time, the People's Bank of China signaled a shift in its policy approach by withdrawing liquidity from the financial system. The central bank drained large amounts of short-term and long-term funds...