* President says more loans needed to sustain investment
* Banks must lend during first half of 2013 - gov't source
BUENOS AIRES Dec 18 (Reuters) - Argentina will demand that banks grant a new round of low-cost loans to companies totaling about $3.5 billion, or the equivalent of 5 percent of bank deposits, President Cristina Fernandez said on Tuesday.
Her government launched a similar plan for the second half of 2012, which she said exceeded expectations.
Fernandez did not specify a deadline for the new loans, but a government source said banks would again have six months to disburse them, starting Jan. 1.
"We're going to renew this request to banks so they lend once again another 5 percent, taking deposits from the month of November ... which represents a total of 17.008 billion pesos($3.5 billion)," Fernandez said in a speech.
"This is truly an important figure that helps sustain credit and continue sustaining investment, which is fundamental for growth," the center-left leader added.
Growth in Latin America's No. 3 economy has slowed sharply this year due to sluggish global demand, high local inflation, a poor grains harvest and the impact of government import and currency controls on business confidence and investment.
The plan requiring banks to grant new business loans must be approved by the central bank's board of directors.
When the government unveiled its initial lending initiative in July, it said interest rates would be capped at 15 percent - well below private estimates for annual inflation, which tend to hover around 25 percent.
It also said half the loans would have to go to small and medium-sized businesses, and the money should finance capital goods purchases and new construction or expansion projects aimed at increasing the production of goods and services.
Many banks complied with the requirements in part by renegotiating loans with their current clients at lower rates.
Lending levels in Argentina are among the lowest in Latin America. Many smaller companies do not qualify for state-subsidized bank loans because of tough requirements, and both deposits and loans tend to be short-term due to inflation and the country's volatile history.
Argentina's biggest banks include Banco Macro and Banco Galicia, owned by Grupo Financiero Galicia .