** At the midday break, the Shanghai Composite index was up 0.2% at 2,897.59 points, unchanged on a weekly basis. The CSI300 index gained 0.6% on the day but down 0.2% week-on-week.

** CSI300's financial sector sub-index was higher by 0.2%, the consumer staples sector added 1.8%, the real estate index was down 0.8% and the healthcare sub-index was up 1.4%.

** Chinese H-shares listed in Hong Kong rose 1.3%. The city's Hang Seng Index was up 0.7% at 25,880.82, down 1.1% so far this week.

** The smaller Shenzhen index was up 0.2% and the start-up board ChiNext Composite index was higher by 0.3%.

** The United States and China indicated on Thursday that they will resume trade talks, with U.S. President Donald Trump saying some discussions were taking place and that more are scheduled.

** China's commerce ministry also said a September round of meetings was being discussed by the two sides, but said it was important for Washington to cancel a tariff increase.

** A new round of U.S. tariffs on some Chinese goods is scheduled to take effect on Sunday, threatening to escalate an already bitter trade war.

** Factory activity in China is expected to have contracted for the fourth straight month in August amid trade war escalation, a Reuters poll showed.

** The official Purchasing Managers' Index (PMI) for August is expected to be unchanged at 49.7 from July but stay below the 50-point mark that separates expansion from contraction.

** "We remain cautious toward Chinese equities in general given the macro headwinds and increasing uncertainties in U.S.-China trade negotiations," Morgan Stanley analysts said in a note on Friday. ** Stocks around the region also rallied on trade talk optimism, with MSCI's Asia ex-Japan stock index firmer by 1.1% while Japan's Nikkei index was up 1.4%.

** The yuan was quoted at 7.1511 per U.S. dollar, 0.11% weaker than the previous close of 7.143.

** The largest percentage gainers in the main Shanghai Composite index were Shenzhen Heungkong Holding Co Ltd and Zhejiang Guangsha Co Ltd, both up 10.1%, followed by Zhejiang Huatie Construction Safety Science and Technology Co Ltd, 10% higher.

** As of 0400 GMT, China's A-shares were trading at a premium of 28.09% over the Hong Kong-listed H-shares.

** The Shanghai stock index is below its 50-day moving average and above its 200-day moving average.