China stocks were largely unchanged on Friday, reversing earlier losses, as reform hopes underpinned the market, with the main indexes up for the third straight week thanks to improving risk appetite.

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The blue-chip CSI300 index was unchanged at 3,473.85 points, while the Shanghai Composite Index added 0.1 percent to 3,253.43 points.

For the week, CSI300 gained 1.5 percent, while SSEC climbed 1.6 percent.

The main indexes dropped for most of the day as resources shares dragged, but reversed losses in the afternoon after centrally-owned state companies jumped on reform hopes, with China United Network Communications advancing 8.1 percent to a 6-week high.

The director of China’s state assets regulator Xiao Yaqing said on Friday that the country should further deepen mixed-ownership and supply-side reforms, the official Shanghai Securities News reported.

"Market sentiment remains optimistic and the upward trend is not yet broken," said Wu Kan, head of equity trading at Shanshan Finance.

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"The upcoming National People’s Congress, and the first-quarter earnings season will keep investors excited."

Reflecting rising risk appetite, China’s outstanding margin loans have risen for four consecutive days to exceed 900 billion yuan ($131.00 billion), as investors appear more willing to use borrowed money to buy stocks.

Banks fell 0.3 percent, as news of Guo Shuqing, governor of China’s eastern Shandong province, becoming China’s new top banking regulator added to uncertainty to a sector facing increasing deleveraging pressure.

Sector performance was mixed. Losses were led by material stocks, while transport plays stood out with a 1.8 percent gain.

S.F. Holding, founded by billionaire entrepreneur Wang Wei, surged by the 10 percent trade limit to a near four-month high, surpassing China Vanke and Midea Group to become the largest stock by market value on Shenzhen Stock Exchange.

($1 = 6.8700 Chinese yuan renminbi)

(Reporting by Luoyan Liu and John Ruwitch; Editing by Shri Navaratnam)

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