UPDATE 1-China November bank lending above forecasts, tightening fear eases

Wed Dec 11, 2013 4:17am EST

* Nov new loans 624.6 bln yuan vs forecast 590 bln yuan

* Nov social financing 1.23 trln yuan vs Oct 856.4 bln

* Nov M2 +14.2 pct yr/yr vs forecast +14.2

BEIJING, Dec 11 (Reuters) - New bank lending in China quickened in November and a broad measure of liquidity accelerated sharply, adding to signs the economy is regaining momentum and relieving market fears of monetary policy tightening.

Banks made 624.6 billion yuan ($102.88 billion) worth of new yuan loans in November, higher than a forecast of 590 billion yuan and well above the previous month's 506.1 billion yuan, data released on Wednesday by the People's Bank of China showed.

China's total social financing aggregate, a broad measure of liquidity in the economy, jumped to 1.23 trillion yuan in November versus 856.4 billion yuan the month before.

Rising money market rates and bond yields indicate the central bank is committed to deleveraging the economy by tapping the brakes on liquidity conditions, but there is little sign of a sharp turnaround in monetary policy.

"China's money and credit showed steady growth in November, reflecting robust demand for credit as the economy is on track for recovery," said Jiang Chao, analyst at Haitong Securities in Shanghai.

"We expect total new yuan loans for this year to reach 9 trillion yuan and the annual figure for next year will be around 9-9.5 trillion yuan."

The broad M2 money supply rose 14.2 percent last month from a year earlier, the central bank said in a statement on its website, www.pbc.gov.cn, in line with the forecast in a Reuters poll.

M2 growth this year looks almost certain to surpass the central bank's target of 13 percent. It is widely expected to stick with the same target in 2014.

Outstanding yuan loans rose 14.2 percent from a year earlier versus forecasts for growth of 14.1 percent.

Earlier data showed China's annual inflation unexpectedly eased to 3 percent in November, cooling market fears of any imminent policy tightening as authorities meet this week to outline their policy and reform priorities for 2014.

Growth in China's factory output and investment eased slightly in November while retail sales grew at their strongest rate this year, suggesting the economy is on track to achieve the government's 7.5 percent growth target this year.

In addition, exports handily beat forecasts, adding to recent evidence of stabilisation in the world's second-largest economy.

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