* SSEC -0.2%, CSI300 -0.3%, HSI flat

* Consumer staples continue to drag on Shanghai index

* SMIC shares slump after report of possible U.S. blacklisting

SHANGHAI, Sept 7 (Reuters) - Shanghai shares extended losses on Monday as investors sold stocks seen as being over-valued, with Semiconductor Manufacturing International Corp (SMIC) sinking on reports of a possible U.S. blacklisting. ** At the midday break, the Shanghai Composite index was down 0.16% at 3,350.03 points, set for its fourth straight session of losses, while China's blue-chip CSI300 index was down 0.28%. Losses on both the indexes were limited by strong domestic exports data for August. ** The consumer staples sector, which had weighed on the broader index on Friday, dropped 0.68%. ** "Optimistic expectations for the economy are clearly overdrawn, and it has become market consensus that some sectors are very expensive," Jianghai Securities analysts said in a note. ** "We believe that high valuations mean the market will correct to a reasonable level and that a market decline is inevitable," they added. ** Shares of China's largest chipmaker, SMIC, slumped 19.75% in Hong Kong and 9.2% in Shanghai. ** The Trump administration is considering whether to add SMIC to a trade blacklist, a Defense Department official told Reuters, as the United States escalates its crackdown on Chinese companies. ** The CSI IT sub-index fell 0.89%, while in Hong Kong the IT sector dropped 1.7%. ** Chinese H-shares listed in Hong Kong fell 0.46% to 9,838.75, while the Hang Seng Index was up 0.05% at 24,708.79. ** The smaller Shenzhen index was down 0.26%, the ChiNext Composite index was 1.15% weaker and Shanghai's tech-focused STAR50 index dipped 0.13%.

** The yuan traded at 6.8297 per U.S. dollar, 0.2% firmer than the previous close of 6.8435. (Reporting by Andrew Galbraith; Editing by Aditya Soni)