China stocks posted their biggest weekly drop in seven on Friday, as some big cities tightened COVID-19 restrictions to contain fresh outbreaks, clouding the outlook for an economic recovery.

 

** The CSI 300 Index lost 0.5% on Friday, while the Shanghai Composite Index edged up 0.1%.

** The Hang Seng Index declined 0.7% and the Hang Seng China Composite Index dropped 1%.

** For the week, the CSI 300 Index dropped 2%, while the Hang Seng Index slumped 3.6%. Both indexes recorded their biggest weekly fall since July 15. The Shanghai Composite Index dropped 1.5% for the week.

** Other Asian stock markets also fell ahead of a key U.S. jobs report, as investors braced for more aggressive rate hikes from the Federal Reserve.

** A central bank spokesperson said China has room to adjust monetary policy as stimulus measures to support the pandemic-hit economy have been restrained and consumer inflation remains under control.

** The southwestern Chinese metropolis of Chengdu remained under a lockdown, while some districts of tech hub Shenzhen extended curbs.

** "Investor sentiment was dampened again, mainly due to the COVID flare-up... discounting the resumed easing cycle and housing market stabilisation policies," Morgan Stanley analysts said in a note.

** Real estate developers and consumer staples companies lost more than 1% each.

** Semiconductor stocks jumped 1.5%, helping the information technology sector rise 1.2%, after fresh U.S. crackdown on China's semiconductor industry raised hopes for more domestic stimulus for the sector.

* Nomura analysts maintained their view that Beijing will keep its zero-COVID policy at least until March 2023, when a political reshuffle is fully completed following the 20th National Congress in October.

** Hong Kong-listed tech giants lost 1.4%, even as a senior Chinese securities regulator said China would implement its audit agreement with the United States and strengthen communication with foreign institutional investors.

** Mainland property developers traded in Hong Kong tumbled nearly 4%, with Country Garden Services Holdings down 11.8%.

(Reporting by Shanghai Newsroom; Editing by Rashmi Aich and Subhranshu Sahu)