By Claire Zhang

SHANGHAI, Nov 3 (Reuters) - China's main stock index rose 0.80 percent on Monday, led by banks after comments by a central bank official indicating that China had eased restrictions on lending.
The benchmark Shanghai Composite Index ended the morning at 1,742.591 points, marking a cautiously positive start to the month after a 25 percent drop in October, its biggest one-month fall since July 1994.
Turnover in Shanghai A shares shrank to 12.2 billion yuan ($1.8 billion), down from Friday morning's already light 13.5 billion, reflecting investors' wariness of the weak market. Gaining stocks outnumbered losers by 459 to 408.
Official media reports over the weekend quoted a central bank spokesman as saying that China was no longer imposing strict limits on bank lending, as it sought to preserve stable and relatively rapid economic growth during the global financial crisis.
Analysts doubted, however, that the comments could trigger a sustained rise in the stock market, especially with banks still confronting a weak property market and a slowing economy.

"Turnover is very small. The market needs fresh money coming in to give it a boost," said Wu Nan, an analyst at Xiang Cai Securities.
He said an easing of restrictions on lending would do banks little good if the number of loan applications falls sharply with the economic slowdown.
Industrial & Commercial Bank of China, the country's biggest bank, gained 2.49 percent to 3.71 yuan, while Bank of Communications climbed 3.70 percent to 4.49 yuan.
Property shares were mixed, with China Vanke Co, the country's largest property developer, rising 1.53 percent to 5.97 yuan.
A slowdown in corporate earnings growth continues to weigh on sentiment and many analysts said the market's slide had not yet reached a floor, but the sharp share price declines have brought down valuations and suggest that further falls may be more gradual.
"The downtrend has not changed, but after a steep fall like last month's, the index might consolidate or drop at a slower pace as some negative factors have been priced in," said Xiang Cai Securities' Wu.
Airlines shares were weak due to their poor earnings outlook, with China Eastern Airlines slipping 4.44 percent to 2.80 yuan.
The mainland markets continued to lag gains in Hong Kong, knocking the average premium of domestically listed Chinese shares to Hong-Kong listed shares in the same firms to a two-week low of 28 percent.

($1=6.82 Yuan)

(Editing by Edmund Klamann)

((junjie.zhang@thomsonreuters.com; (8621) 6104-1775; Reuters

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