China bank shares jump on hopes gov't debt swap plan will repair balance sheets
* China bank shares surge after rumours of bond buys by govt
* Fin min said will swap 1 trln yuan of local govt debt
* Seen as repairing bank balance sheets
SHANGHAI, March 12 (Reuters) - China stocks rose on Thursday, led by a surge in banking shares on expectations that lenders and the economy will benefit from Beijing's plans to allow local governments to swap out expensive debt, easing their massive debt burdens.
Investors may have also bought into shares in reaction to rumours that the debt swap would be far larger than the original 1 trillion yuan ($160 billion) reported.
Speculation has also swirled that the government would directly purchase bonds from local government financing vehicles (LGFVs), which would constitute a form of quantitative easing, which has come to be seen as a radical last option for central banks struggling to support their economies.
The CSI300 index rose 1.0 percent, to 3,558.85 points at the end of the morning session, while the Shanghai Composite Index gained 0.9 percent, to 3,321.32 points.
The CSI300 banking index jumped about 3 percent, as investors bet lenders would benefit from the plan to exchange local governments' high-interest maturing debt for low interest municipal or provincial bonds.
With few official details provided yet about the implementation of the debt swap, which was announced at the weekend, the market has been divided over its implications. Continuación...