(Adds context, broader media stock gains in para 5)
SYDNEY, May 8 (Reuters) - Shares in Australia's Ten Network Holdings jumped as much as 48 percent on Monday amid a broad surge in media stocks at the first trading session since the federal government proposed scrapping media ownership restrictions.
A lifting of restrictions is expected to ignite a round of merger and acquisitions in the media sector, where once-mighty broadcasters and publishers have been humbled by competition for revenue with rivals such as Facebook, Google, Amazon and Netflix.
Ten Network, the nation's third-largest free-to-air broadcaster, is a prime takeover target since a poor result sent its share price to record lows late last month.
The stock leapt 48 percent in early trade on Monday, posting its biggest intraday percentage gain in 28 years, before settling around A$0.27, up about 22 percent, while the broader S&P/ASX 200 index gained 0.5 percent.
The proposed rule changes come as publisher Fairfax Media fielded a A$2.2 billion approach from private equity firm TPG Capital, just days after announcing big editorial job cuts.
Other would-be takeover targets such as Prime Media Group , Southern Cross Media Group and Nine Entertainment Co Holdings also rose between 5 percent and 10 percent.
Ten had reported a A$232 million half-year loss and said it desperately needs a loan to continue operating, placing its future in the hands of three billionaire debt guarantors, including News Corp Co-Chairman Lachlan Murdoch.
$1 = 1.3528 Australian dollars Reporting by Tom Westbrook; Editing by Miral Fahmy and Richard Pullin