Taiwan signs financial MOU with China - source

TAIPEI Nov 16 (Reuters) - Taiwan has signed a financial service pact with China, allowing its banks to tap China's massive market and paving the way for banks on both sides to invest in each other, a source said on Monday.

The much-anticipated pact, or memorandum of understanding (MOU), will mainly cover cross-border financial supervision.

The issue of most concern to investors -- guidelines for Taiwanese and Chinese financial firms investing in each other -- will be discussed in a free trade pact, or the so-called economic cooperation framework agreement (ECFA).

Sean Chen, chairman of the island's Financial Supervisory Commission, would hold a press conference at 1015 GMT, a commission official said.

Taiwan aims to sign the ECFA early in 2010, the government has said.

The MOU comes as Taiwan and China have agreed to open their financial markets to each other, a demonstration of the warming ties between the formal political rivals since Taiwan President Ma Ying-jeou took office last year. ($1=T$32.2) (Reporting by Faith Hung; Editing by Joseph Chaney)