SHANGHAI/BEIJING, March 27 (Reuters) - China's banking

stocks outperformed the broader market on Friday after news that

Beijing is considering easing shareholder restrictions to

broaden capital-raising options for lenders.

China's banking regulator is weighing allowing some bank

shareholders to become major investors - defined as holding a 5%

stake or more - in one to two additional banks, on top of an

upper limit of two currently, sources told Reuters on Thursday.

The banking regulator did not respond to Reuters requests on

Thursday for comment on any potential rules changes.

China's CSI Banks Index fell 0.3% at open, and

was roughly flat in early trading. The benchmark CSI300 Index

opened 1% lower.

The potential relaxation "has a positive impact on China

banks," Citi said in a note to clients.

It would help accelerate banks' loan growth, drive

management incentives to boost earnings and share price, and

prod incremental buying from institutional investors including

insurers, Citi said.

The move "could broaden the investor base for China banks,

and would thus be positive for the sector in general," JPMorgan

said in a report.