The benchmark Shanghai Composite Index added 0.2% to close at 3,876.37, and the blue-chip CSI300 Index dropped 0.6%. Both were headed towards a week of losses.

Hong Kong’s benchmark Hang Seng Index added 0.1%. The Hang Seng Tech Index lost 0.7%.

Leading gains onshore, China’s CSI Defense Index rose 1.9% to a two-month high, after the US approved an US$11.1 billion arms package for Taiwan, the largest ever.

The CSI Banks Index added 2% and the energy sector index jumped 1.7% as investors piled into defensive plays.

The financials sector climbed 0.8%, with broker CICC soaring as much as 10% to the daily limit after unveiling plans on Wednesday to buy two smaller rivals in a share-swap deal worth about US$16 billion.

Among laggards, the CSI AI Index and the semiconductor sector both lost 1.8%, after jitters over AI funding dragged tech stocks on Wall Street overnight.

The CSI 300 Real Estate Index lost 1.8% as developer Vanke’s debt crisis continued.

“We continue to expect the market to remain volatile at elevated levels, and a clearer signal of sustained upside is still needed,” analysts at Huaan Securities said in a note.

“January following a strong year tends to see heightened swings, suggesting short-term risks of a pullback remain,” they added.

Asian shares fell as the tech sector took a beating on renewed angst over AI, while investors braced for a wave of central bank meetings that are set to underscore policy divergence worldwide.