Line said it aims to open a bank, pending regulatory approval, which will offer financial services to its almost 80 million users from 2020. It will be 49 percent owned by Mizuho.

Separately, Line said Japanese retailers offering Line Pay services will be able to process payments from Chinese tourists using Tencent's WeChat Pay from early next year.

The moves come as Line seeks alternative revenue streams to offset stagnating user numbers for its eponymous flagship app, expanding into areas such as payments, stock broking, insurance and cryptocurrencies.

News of the tie-ups lifted Line shares to close up 13 percent, adding about $1 billion to the firm's market value. The stock is still down more than 16 percent this year.

Mizuho and Tencent's shares were flat. Tencent's shares are down more than 25 percent this year, hammered by a prolonged regulatory crackdown on gaming, its core business.

(For a graphic on
the chat app operator's share prices, click here https://tmsnrt.rs/2RhbLld

With its growing number of Chinese tourists, Japan is increasingly attractive for China's tech titans, with Alibaba Group Holding Ltd affiliate Ant Financial and ride-hailing firm Didi Chuxing announcing services in recent months.

Japan has been slow to move to cashless payments, with a rush of entrants such as PayPay, backed by SoftBank Group Corp, and Line Pay encouraging consumers to use QR code-based payments, which have become widespread in China, India and elsewhere.

(Reporting by Sam Nussey and Taiga Uranaka; Additional reporting by Chang-Ran Kim; Editing by Muralikumar Anantharaman and Christopher Cushing)

By Sam Nussey and Taiga Uranaka