Shares in three large Chinese banks fell Tuesday after a media report said a US judge had found the banks in contempt for refusing to comply with subpoenas related to a North Korean sanctions violations case.
The ruling could prompt the US to bar one of China's largest banks from the US financial system, the Washington Post report said.
The order did not explicitly identify the banks but details in the case matched those of three large state-backed Chinese banks: the Bank of Communications, China Merchants Bank and Shanghai Pudong Development Bank, the Post reported.
Shares of the Bank of Communications slipped 3.02 percent to 6.10 yuan, China Merchants Bank fell 4.82 percent to 36.13 yuan and Shanghai Pudong Development Bank sank 3.08 percent to 11.66 yuan.
The banks did not comply with US subpoenas for information in an investigation into North Korea sanctions violations, the Post reported.
The order could allow the US attorney general or Treasury secretary to cut off Shanghai Pudong Development Bank's access to dollars -- crucial for its ability to operate globally, the report said.
Chinese bank shares led the broader stock market down on Tuesday as investors fretted the latest US broadside against China could imperil trade talks between US President Donald Trump and Chinese leader Xi Jinping at the upcoming G20 summit in Japan.
The two leaders agreed to meet after negotiations broke down last month and both sides exchanged steep tariff increases on billions of dollars worth of goods.
Asked about the US court ruling, China's foreign ministry said it requires all Chinese companies to follow local laws and that it has rigorously enforced all UN sanctions.
"We always oppose the so-called long-arm jurisdiction by the United States against Chinese enterprises," ministry spokesman Geng Shuang said Tuesday.