* China drops ownership cap on banks
* China raises ownership limit on securities JVs from 49 pct to 51 pct
* Changes effective immediately but awaiting specific rules (Recasts lead paragraph, adds companies' reaction)
BEIJING, Nov 10 (Reuters) - China will raise foreign ownership limits in financial firms in a step granting access to a tantalizing multi-trillion dollar financial services market, as the world's second-biggest economy seeks to position itself as a major global finance hub.
The move, announced on Friday by vice finance minister Zhu Guangyao, comes a day after U.S. President Donald Trump reiterated calls for better access to Chinese markets in meetings with Chinese President Xi Jinping.
Xi is driving broad economic reforms by opening up Chinas capital markets, internationalizing the yuan currency, and seeking technical know-how through the pursuit of massive inbound and outbound investments.
The latest changes include raising the limit on foreign ownership in joint-venture firms involved in the futures, securities and funds markets to 51 percent from the current 49 percent.
They will take effect immediately following the drafting of specific related rules, Zhu told a news conference, adding China is "formulating a timetable and roadmap for financial sector reform and opening up."
The foreign business community gave a cautious welcome to the news.
"Financial services further opening definitely has been high on our list," said Ken Jarrett, President of American Chamber of Commerce in Shanghai.
"It's a step in the right direction. We'll have to see the detailed rules. In China you always have to pay attention to the fine print to see how quickly it moves, but to finally ease up on the cap is something that is welcome."
Peter Alexander, managing director of Z-Ben Advisors, a Shanghai-based consultant for the fund industry, sees Friday's announcement as a measured step towards bigger changes down the road. "This is part of a methodical and deliberate process. We fully expect foreign asset managers at some point in the next several years to have full control of their own ventures."
The plan to ease ownership restrictions comes as Beijing faces mounting pressure from Western governments and business lobbies to remove investment barriers and onerous regulations that restrict overseas companies' operations in its markets.
During his trip to Beijing this week, Trump said that trade between the two nations was unfair, and called for greater market access for U.S. companies.
"We really have to look at access, forced technology transfer, and the theft of intellectual property, which just, by and of itself, is costing the United States and its companies at least $300 billion a year," Trump said.
"Both the United States and China will have a more prosperous future if we can achieve a level economic playing field. Right now, unfortunately, it is a very one-sided and unfair one."
CHANNELING FOREIGN MONEY
Reuters reported on Tuesday that China planned to allow global banks to take a stake of up to 51 percent in their onshore securities ventures for the first time and tie up with local non-financial firms.
China has been sluggish to give foreign players more access to its financial sector, but has promised to quicken the pace as foreign investment into Asia's economic powerhouse slows.
China has implemented strict capital controls to contain capital outflows, while opening up new channels for foreign money to come into the domestic markets.
Foreign financial firms are still small players in the financial sector, and the sheer size of the market is a big lure for overseas players.
Foreign banks account for just 1.4 percent of the total 181.7 trillion yuan ($27.37 trillion) of banking assets in China, according to a 2017 study by KPMG. Their average returns on assets and on equity, were about half the level of their domestic rivals, said the study.
UBS, which holds a 25 percent interest in domestic firm UBS Securities Co Ltd, said the changes were an important step in further opening up China's financial sector.
"China is a key market for UBS and, as indicated previously, we continue to work towards increasing our stake in UBS Securities Co Ltd," said Eugene Qian, Chairman of UBS China Strategy Board and Member of the Asia Pacific Executive Committee.
A spokesperson for JPMorgan, which sold its 33.3 percent stake in its China securities JV to First Capital in December 2016, said the company "welcomes any decision made by the Chinese Government that looks to liberalize its financial sector further."
TOO LITTLE TOO LATE?
Some industry watchers said the changes are too little too late.
"This looks good, but in reality it is pretty small and it is too late," said Keith Pogson, head of the Asia financial services team at EY.
"If you are an international investment bank, you will be there for the sake of your global franchise and having it as part of your network, not because you think you will make much money in China."
All the same, markets reacted positively to the news, with insurers and futures-related firms rallying strongly.
New China Life Insurance jumped nearly 6 percent after the announcement, while Ping An Insurance advanced more than 4 percent and China Pacific Insurance Group rose over 3 percent.
China will drop foreign ownership restrictions on local banks and asset management companies, Zhu said.
Full foreign ownership of local firms involved in the futures, securities and funds markets will not be permitted until after three years, while full overseas ownership of insurance firms will be allowed only after five years.
For most foreign investment banks, including the likes of Goldman Sachs, the prospect of playing in a huge market seemed too good to pass up.
We welcome todays announcement and look forward to playing a greater role in Chinas capital markets, a spokesperson for Goldman Sachs said. ($1 = 6.6388 Chinese yuan renminbi) (Reporting by Kevin Yao and Stella Qiu; additional reporting by John Ruwitch in Shanghai, Matthew Miller in Beijing and Jennifer Hughes and Umesh Desai in Hong Kong; Writing by Elias Glenn; Editing by Shri Navaratnam)