Taiwan to let Chinese invest in local banks -paper

TAIPEI, May 20 (Reuters) - Taiwan will allow Chinese investors to take a stake in local state-run banks by buying their shares in the market, the Economic Daily said on Wednesday in what would be the latest sign of easing ties with China.

The report, citing Finance Minister Lee Sush-der, also said the Taiwan government would not sell its holdings to Chinese investors in state-run lenders, such as First Financial (2892.TW), Mega Financial (2886.TW), Hua Nan Financial (2880.TW), Chang Hwa Bank (2801.TW) and unlisted Taiwan Financial.

Taiwan intended to continue to control these banks even after Chinese investors had bought a stake, the report said.

Taiwan and China recently signed a financial deal, paving the way for them to sign a memorandum of understanding on financial supervision, sparking a 76 percent rally in the island's financial stocks .TFNI since early March.

China has claimed sovereignty over self-ruled Taiwan since the end of the Chinese civil war in 1949. Beijing has vowed to bring the island under mainland rule, by force if necessary, but ties have improved enormously in the last year.

(Reporting by Faith Hung; Editing by Nick Macfie)