SHANGHAI, Dec 26 (Reuters) - Shanghai stocks took a breather on Friday after rising for seven sessions in a row as profit-taking pressure grew.
** But Chinese equities are set for their biggest weekly gain in two months, and analysts expect the upward trend to continue, aided by a strengthening yuan.
** The Shanghai Composite Index .SSEC fell 0.2% by the lunch break following a seven-day rising streak. China's blue-chip CSI300 Index .CSI300 was flat.
** Private fund manager Rabbit Fund expects China stocks to zig-zag higher as the economy slowly recovers.
** Analysts also expect the market to benefit from a strengthening yuan, which on Thursday registered its strongest official close in 2-1/2 years.
** The currency appreciation "is expected to whet foreign appetite for yuan assets, push up valuations and increase interbank liquidity," Huatai Securities said.
** The brokerage expects the yuan to reach 6.82 per dollar by the end of next year, which is nearly 3% stronger than the current level.
** Gold miners .CSI931238 jumped as prices of the yellow metal surged to a record high in early Asian trading on Friday.
** Steelmakers .CSI930606 rose after China on Friday said it will continue to regulate crude steel output and prohibit the addition of illegal new capacity from 2026 to 2030.
** Expectations of Beijing's broader crackdown on oversupply and disorderly competition boosted shares in the metal sector .CSISNMIM.
** But tech stocks, including chip-makers .CSI931865 and consumer electronics firms .CSI931494, dropped on profit-taking after strong gains recently.
** Sichuan Swellfun Co shares 600779.SS slumped 3% after the spirit maker denied media reports of a potential acquisition by a rival company.
** The Hong Kong stock market is closed on Friday for a public holiday.
(Reporting by Shanghai Newsroom; Editing by Sonia Cheema)
((samuel.shen@tr.com))
