(Updates to market close)

By Jiaxing Li

HONG KONG, Sept 5 (Reuters) - China's stocks on Friday

regained almost all the ground lost in in the previous session,

but still posted their biggest weekly fall in five months as a

stellar bull run peters out.

The Shanghai Composite Index closed up 1.2%, some 12

points above the key psychological level of 3,800. For the week,

it declined 1.2%.

China's blue-chip CSI300 Index bounced 2.2%. It

was down 0.8% for the week, its biggest drop since late July.

Tech shares, which bore the brunt of Thursday's losses, led

the recovery on Friday. The AI sector was up 5% and

semiconductor stocks climbed 3%.

The start-up board index surged 6.6%, its best

single-day gain in 11 months. Chip designer Cambricon

also jumped 6.6% after sinking some 20% earlier in

the week.

Traders said there was buying on dips after a wave of

profit-taking that followed China's largest-ever military parade

subsided. Markets have also largely shaken off the jitters

triggered by a Bloomberg News report that Beijing is considering

measures to curb excessive stock speculation.

China's central bank said on Thursday it would inject 1

trillion yuan ($140 billion) into the banking system on Friday

via outright reverse repo operations to keep liquidity

"reasonably ample", interpreted by some as a gesture aimed at

calming investors.

Shanghai's benchmark index had shot to 10-year highs over

the past two months, powered by record sums of leveraged bets

chasing the rally. Analysts at China Securities said trading

could remain volatile in the near term as the market enters a

consolidation period.

"Taking some of the air out of the frothy part of the market

is setting up for a more sustainable path down the line," said

Jerry Wu, a portfolio manager at Polar Capital, based in London.

"It will be a healthy correction and I don't think it

changes the direction of travel, which we do believe is a sort

of innovation-driven rally."

In Hong Kong, the benchmark Hang Seng was up 1.4% on

Friday, and the tech sector rebounded 2% to register

its fifth straight week of gains.

($1 = 7.1529 Chinese yuan)

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