China's insurance regulator is expected soon to announce policies expanding and diversifying insurers' investment scope, in a move to ease restrictions on the sector, the official Shanghai Securities News reported on Tuesday.

The China Insurance Regulatory Commission is considering moves to allow insurers to conduct margin trading, short selling and trading in financial derivatives both abroad and domestically, the newspaper said.

Financial derivatives trading will be limited to stock index and bond futuresfor hedging purposes only, not for investment, the newspaper said, citing an anonymous regulatory official with direct knowledge of the policy discussion.

The report also indicated regulators are considering a relaxation of rules governing overseas investment, and domestic equity and real estate investment.

Broadened foreign investment will include depository certificates, equity in private enterprises, real estate, and investment funds, allowing the insurers to diversify their investment portfolio, the newspaper said.

Domestically, insurers will be allowed to invest in leading companies in agriculture, energy and natural resources. The ceiling of insurers' private equity investment will also be raised, the newspaper reported.

Chinese insurers, which invest most of their assets in bonds, have been seeking to widen their investment scope to improve returns.

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