* Investors ready to take part in capital hike -Manager Magazin

* Bank's confidence grows of much lower U.S. fine -Manager Magazin

* Shares rise as much as 4 percent

(Adds share price, details on fine, management)

FRANKFURT, Oct 20 (Reuters) - Deutsche Bank's DBKGn.DE largest investors, investment vehicles controlled by the Qatari royal family, would be ready to take part in a capital increase, German business monthly Manager Magazin reported on Thursday, citing banking sources.

Germany's biggest lender is battling to contain the damage from a U.S. demand for a $14 billion settlement over the sale of toxic mortgage bonds before the financial crisis. It is fighting the fine but could have to turn to investors for more money.

The magazine said Qatar and Abu Dhabi's sovereign wealth funds and an unnamed investor from China would also be prepared to participate in any capital hike.

Together with those, the Qatari investors, who centre around Sheikh Hamad bin Jassim al-Thani, would be prepared to raise their total stake to 25 percent from 10 percent, it said.

Sovereign wealth funds the Qatar Investment Authority and the Abu Dhabi Investment Authority both declined to comment on the report.

Deutsche Bank also declined to comment on the report, which briefly lifted its shares more than 4 percent to a five-week high.

By 1318 GMT, they were trading up 1.7 percent at 12.76 euros, the second-top gainers in the German blue-chip DAX GDAXI. . The shares have been hammered since September when news of the U.S. fine emerged.

Manager Magazin said confidence was growing at the bank that it would come away with a fine significantly lower than $14 billion, and that a capital increase would be unnecessary.

It added that a settlement was still expected to be reached before the Nov. 8 U.S. presidential election.

Sources told Reuters earlier this month that the Qatari investors would probably take part in any capital hike but would be unlikely to acquire as much as 25 percent.

Manager Magazin said the potential investors would want Deutsche Bank to keep its investment-banking operations but did not necessarily want to keep Chief Executive John Cryan and some other top managers.

(Reporting by Alexander Huebner; Writing by Georgina Prodhan; Editing by Jonathan Gould and Susan Thomas) ((georgina.prodhan@thomsonreuters.com; +49 69 7565 1279; Reuters Messaging: georgina.prodhan.thomsonreuters.com@reuters.net))