July 8 (Reuters) - China stocks ended lower on Friday, snapping a five-week rising streak, as worries over COVID-19 flare-ups and geopolitical tensions outweighed hopes for stimulus from Beijing. Hong Kong shares tracked overnight Wall Street gains.

** Both China's blue-chip CSI300 Index and the Shanghai Composite Index fell 0.3% at the close, reversing early gains, and posting their first weekly loss in six.

** In Hong Kong, the benchmark Hang Seng Index rose 0.4%, but for the week as a whole the index lost 0.6%.

** Morgan Stanley said in a note that sentiment in China shares dropped notably in the past week.

** "Investors remain alert to domestic COVID-19 flare-ups, as the economy is still at an early stage of a bumpy recovery trajectory," the bank wrote.

** The market was not helped by signs of lingering Sino-U.S. tensions. A senior Chinese military officer warned his U.S. counterpart on Thursday that any "arbitrary provocations" would be met with a "firm counterstrike" by China.

** The China market had risen earlier after a Bloomberg report saying China's Ministry of Finance was considering allowing local governments to sell 1.5 trillion yuan ($220 billion) of special bonds in the second half of this year to boost infrastructure funding.

** "This move, if confirmed, is positive," Nomura Chief China Economist Ting Lu wrote in a note.

** "However, we point out that it could just be another policy step to fill the vast funding gap as a consequence of sharply falling fiscal revenue and land sales."

** China's transport, infrastructure and property shares rose, but steel and energy stocks fell.

** Shares of companies that produce materials used in protection vests, including Jihua Group and Yantai Tayho Advanced Materials Co, rose on news that former Japanese prime minister Shinzo Abe had been taken to a hospital after being shot while giving an election campaign speech. (Reporting by Shanghai Newsroom Editing by Mark Heinrich)