SHANGHAI, June 27 (Reuters) - China stocks were little changed on Friday but were set to notch their biggest weekly gain in more than seven months, led by financial shares, as a ceasefire between Israel and Iran lifted investor sentiment.

** China's blue-chip CSI 300 Index .CSI300 was flat by the lunch break, while the Shanghai Composite Index .SSEC lost 0.2%. Hong Kong benchmark Hang Seng .HSI was down 0.1%.

** Chinese brokerage stocks rallied sharply this week, buoyed by easing global geopolitical tensions and improved investor risk appetite, Morgan Stanley analysts said in a note.

** Over a 6- to 12-month horizon, increased portfolio allocation to China appears likely, supported by improving market fundamentals and growing global investor demand for diversification, they said.

** Tianfeng Securities 601162.SS jumped 10% on Friday.

** The CSI 300 Index has risen 2.6% this week, on track for its strongest weekly gain since November 2024, while the Hang Seng Index advanced 3.3%, heading for its best week since March.

** Onshore financial shares .CSI300FS climbed nearly 4% this week.

** China's industrial profits swung back into sharp decline in May from a year earlier, as factory activity slowed in the face of broader economic stress.

** The United States has reached an agreement with China on how to expedite rare earth shipments to the U.S., a White House official said on Thursday, amid efforts to end a trade war between the world's biggest economies.

** Shares of Xiaomi 1810.HK surged to a record high on Friday, after the company launched a new electric car model with a strong beat on pre-orders.

** But this has added pressure on other auto makers, with Li Auto 2015.HK and Xpeng 9868.HK down 1.4% and 2.7%, respectively.

** Hong Kong's HSCI Materials Index .HSCIM and mainland's Non-Ferrous Metals Index .CSISNMIM rose 2.5% and 2.4%, respectively, as non-ferrous metal prices such as copper broadly rallied.

(Reporting by Shanghai Newsroom; Editing by Mrigank Dhaniwala)

((li.gu@tr.com))