Ng build fails. CssSyntaxError since 1.7.0-rc.0

Versions

Error occurs since v1.7.0-rc.0

Angular CLI: 1.7.0-rc.0
Node: 8.9.4
OS: win32 x64
Angular: 5.2.5
... animations, common, compiler, compiler-cli, core, forms
... http, language-service, platform-browser
... platform-browser-dynamic, router

@angular/cli: 1.7.0-rc.0
@angular-devkit/build-optimizer: 0.3.1
@angular-devkit/core: 0.3.1
@angular-devkit/schematics: 0.3.1
@ngtools/json-schema: 1.2.0
@ngtools/webpack: 1.10.0-rc.0
@schematics/angular: 0.3.1
@schematics/package-update: 0.3.1
typescript: 2.6.2
webpack: 3.10.0

Observed behavior

ERROR in ./node_modules/raw-loader!./node_modules/postcss-loader/lib??embedded!./src/assets/styles/page.css
(Emitted value instead of an instance of Error) CssSyntaxError: C:\Users\{omitted}\angular-project\src\assets\styles\page.css:259:2159: Can't resolve '%23linearGradient-1' in 'C:\Users\{omitted}\angular-project\src\assets\styles'

> 259 |   background: transparent url("../img/icon.svg") no-repeat 50% 0;                                                                 ^
  260 | }

I get similar error messages for each svg file. The page.css is listed in angular-cli.json styles array.

Repro steps

ng build

Possible breaking commits: https://github.com/angular/angular-cli/commit/4a745c9 https://github.com/angular/angular-cli/commit/fa175d8

[smoke]

This is happening with SVG only.

[FrancescoBorzi]

1.7.1 is solving the issue for me, thanks a lot @clydin