<div id="readability-page-1">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 &#34;has a positive impact on China banks,&#34; 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 &#34;could broaden the investor base for China banks, and would thus be positive for the sector in general,&#34; JPMorgan said in a report. (Reporting by Reuters Staff; Editing by Tom Hogue)</div>

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China's banking stocks outperformed the broader market following news of potential easing of shareholder restrictions by Beijing. The banking regulator is considering allowing major investors to hold stakes in more banks, which could enhance capital-raising options. Analysts from Citi and JPMorgan noted that this change could positively impact loan growth, earnings, and attract institutional investors, thereby benefiting the banking sector overall.

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China banks outperform broader market after news of shareholding rule changes