Chinese stocks fell on the last trading day before the week-long Lunar New Year holiday amid thin trading and despite improved relations with the U.S.

The Shanghai Composite Index, the main gauge of Chinese stocks, lost 1.3%, or 51.95 points, to 4,082.07. The Shenzhen Component Index declined 1.3%, or by 182.81 points, to 14,100.19.

Ahead of the Chinese New Year, trading usually thins, but markets have held "at a relatively high level" without pulling back, Ruters reported, citing Topsperity Securities.

Chinese markets saw signs of improvement after U.S. President Donald Trump set aside some tech security measures against Beijing before a meeting with President Xi Jinping in April, Reuters said.

The Shanghai Stock Exchange STAR Semiconductor Material Index finished 1% higher.

Housing prices across 70 cities in China fell further in January, while state-owned companies have started to buy foreclosed properties to stave off effects of the real estate plunge.

In corporate news, Shanxi Lu'an Environmental Energy Development's (SHA:601699) shares closed 3% lower despite coal sales rising 17% year over year in January.

Huaming Power Equipment (SHE:002270) proposed to list on the Hong Kong bourse. Shares closed 3% lower.