* Airlines slump on fears of fresh movement curbs
* Residents in virus-hit suburbs asked to stay home for three days
* ASX 200 set for seventh straight weekly gain
* Gold headed for best week in over a month
By Arpit Nayak
Dec 18 (Reuters) - Australian shares fell on Friday as a fresh cluster of COVID-19 cases in the country's largest city ignited fears that movement curbs could make a comeback and slow down an economic recovery.
New South Wales state Premier Gladys Berejiklian warned Sydney should prepare for more infections after 17 new cases were reported in the city's northern coastal suburbs, prompting authorities to ask residents to stay at home for three days. S&P/ASX 200 index .AXJO fell 0.5% to 6,722.9 by 0006 GMT, retreating from a near-10-month high hit in the previous session. But, the index is still headed for a seventh straight weekly gain.
The fresh outbreak marks the end of a two-week run of no local coronavirus transmission and has prompted other states to tighten movement across state borders.
The possibility of further restrictions ahead of Christmas season dragged shares of airlines lower, with Qantas QAN.AX and smaller rival Regional Express Holdings REX.AX sliding as much as 4.3% and 5.6%, respectively.
Heavyweight financials .AXJO led losses on the benchmark, as Commonwealth Bank of Australia CBA.AX dropped 1.3% and National Australia Bank NAB.AX shed 1.6%.
Energy stocks .AXEJ also dipped despite an uptick in oil prices, with Ampol ALD.AX and Santos STO.AX being the biggest the drags. O/R
On the flip side, gold stocks .AXGD rose 1.8% and supported some gains on the metals and mining sub-index .AXMM as the bullion continued its climb on hopes of more U.S. stimulus. Newcrest Mining NCM.AX added 1.7% and Northern Star Resources NST.AX tacked on 2.6%. GOL/
The gold sub-index was on track for its best week since Nov. 6.
In New Zealand, the benchmark S&P/NZX 50 index .NZ50 rose 0.5% to 12,950.52, with utilities and healthcare stocks leading the gains.
However, flag carrier Air New Zealand AIR.NZ , which has been preparing for a travel bubble with Australia in early 2021, fell 1.9%.