* Eurogroup chief says cap on capital buffers nonsense
* France's Sapin considers 5-percent hike as red line
* EU estimates put rise at 25 percent, officials said (Recasts, adds quotes and details after meeting)
By Francesco Guarascio
LUXEMBOURG, Oct 11 (Reuters) - European Union countries were at odds on Tuesday over a global reform of banking rules with divergent views about a cap on increases in banks' capital buffers that might result from the review.
The Basel Committee, banking supervisors from nearly 30 countries, is due to complete its reform, known as Basel III, by the end of 2016. The new rules are meant to make the sector more financially sound by reducing reliance on internal risk models.
European banks and regulators have warned against an excessive increase in capital requirements that could affect mostly European banks because they use internal models more than their U.S. rivals, which rely more on standardised methodology.
Higher capital reserves would raise costs for EU banks.
Asked whether there should be a set limit to any hikes in capital requirements, Eurogroup President Jeroen Dijsselbloem told reporters before an EU finance ministers' meeting that discussed the issue: "My approach is different".
Reacting to France's push for a 5-percent limit, he said: "I haven't heard it. It does not make sense."
French Finance Minister Michel Sapin said a 5-percent hike would be considered significant and would be opposed by France.
Speaking with reporters after Dijsselbloem's remarks, Sapin said that the French position was shared by Germany and most other EU states.
The discussion on Basel at the finance ministers' meeting was requested by France, with the support of Germany, EU officials said.
German Finance Minister Wolfgang Schaeuble kept out of the quarrel, limiting his comments to saying after the meeting that European banks should not be penalised.
A proposal for a 5-percent limit was included in a EU finance ministers' draft statement but was removed from the final conclusions of a meeting in July, as member states could not agree on the issue.
The Slovak finance minister Peter Kazimir, whose country holds the rotating presidency of the EU, said ministers did not discuss a figure on Tuesday, and pleaded with his colleagues to keep a common front on the Basel reform.
He referred to the EU position in the conclusions of the July meeting, where ministers simply urged the Basel group to avoid a "significant increase" in overall capital requirements but set no limit.
Officials at banking trade body AFME estimated the new rules were likely to increase the capital buffer held by lenders by at least 6 percent on average from the existing figures.
The hike may be as high as 25 percent, according to EU estimates based on a sample of 95 banks discussed on Tuesday by EU finance ministers, two EU officials said.
After the meeting, the EU commissioner in charge of financial services, Valdis Dombrovskis, reiterated EU red lines for the Basel reform and said proposals may lead to significant rises in capital requirements as well as increased risks. (Additional reporting by Frank Siebelt in Luxembourg; Editing by Alastair Macdonald and Louise Ireland)