SHANGHAI: Chinese stocks closed flat on Friday with investor sentiment dented by an expanded trade restriction list issued by the United States and potential new China tariffs, while Hong Kong shares tracked regional markets higher.

The Biden administration added 37 Chinese entities to a trade restriction list on Thursday, including some for allegedly supporting the spy balloon that flew over the United States last year, heightening tensions between Beijing and Washington.

US President Joe Biden is also set to announce new China tariffs as soon as next week targeting strategic sectors, and is expected to largely maintain existing levies, a source told Reuters.

Bloomberg News reported on Thursday that China is considering a proposal to exempt individual investors from paying dividend taxes on Hong Kong stocks bought via Stock Connect, lifting Hong Kong shares.

Property shares led gains on Friday after Hangzhou and Xian, two Chinese provincial capitals lifted all home purchase restrictions on Thursday to lure buyers and shore up their sagging real estate markets, raising the prospect of other megacities following suit.

Asian stocks rose, on course for a third week of gains, while the dollar was steady as fresh signs of an easing US labour market stoked optimism around interest rate cuts this year ahead of next week’s crucial inflation data.

At the close, the Shanghai Composite index was up 0.01% at 3,154.55, and the blue-chip CSI300 index was up 0.05%.

The Hang Seng index was up 425.87 points or 2.3% at 18,963.68. The Hang Seng China Enterprises index rose 2.41% to 6,718.86.

For the week, the CSI 300 was up 1.7%, rising for a fourth week, and the Hang Seng added 2.6%.

The smaller Shenzhen index ended down 0.71% and the start-up board ChiNext Composite index was weaker by 1.15%.

The sub-index of the Hang Seng tracking energy shares rose 4.1%, while the IT sector rose 0.57%, the financial sector ended 3.59% higher and the property sector rose 3.79%.