* May new loans 870.8 bln yuan, vs f'cast 750 billion yuan
* May M2 up 13.4 pct yr/yr, vs f'cast 13.1 pct
* TSF at 1.4 trln yuan in May, vs 1.55 trln yuan in April (Writesthrough, adds fresh analysts comments and S&P affirming rating)
BEIJING, June 12 China's new bank lending and money supply rose faster than expected in May, as the government ramps up policy stimulus measures to energise a slowing economy.
The central bank data released on Thursday added to reassuring signs that the world's second largest economy is pulling out of its soft patch -- first quarter growth of 7.4 percent was the slowest in 18 months - but the recovery appears patchy.
A mini-stimulus package has helped, and analysts do not rule out more measures by Beijing, especially if the property market starts to deteriorate rapidly.
"Policymakers' efforts to channel bank lending to chosen parts of the economy are helping to support loan growth, even as controls on shadow banking continue to bite, Julian Evans-Pritchard, China economist at Capital Economics, said in a note.
"Although this has helped to stabilise credit growth, policymakers are likely to stop short of driving a major credit rebound."
Chinese banks made 870.8 billion yuan ($140.08 billion) worth of new yuan loans in May, 12.4 percent more than in April and higher than a forecast of 750 billion yuan.
The modest pick-up in bank credit reflected efforts by the People's Bank of China to support growth while reducing elevated debt levels.
The PBOC has pledged to keep credit and money supply growth at a reasonable level to meet the needs of the real economy. It aims for a 13 percent annual rise in M2 this year.
Broad M2 money supply rose 13.4 percent in May from a year earlier, the central bank said in a statement on its website, www.pbc.gov.cn, quickening from 13.2 percent rise in April and ahead of forecast in a Reuters poll of a 13.1 percent rise.
Outstanding yuan loans grew 13.9 percent from a year earlier versus forecasts for growth of 13.7 percent.
Aggregate total social financing, a broad measure of liquidity in the economy, was 1.4 trillion yuan in May versus 1.55 trillion yuan the month before.
JURY STILL OUT
"It is still too early to confirm a broad-based stabilisation in the economy, and we will have to wait for more financing data to help prove this trend," said Yao Xuekang, an analyst at Essence Securities in Beijing.
The government is due to release industrial output, retail sales and fixed-asset investment on Friday.
The PBOC said on Monday it would lower the reserve requirement ratio - the level of reserves banks must hold - for those banks that have sizeable loans to the farming sector and small and medium-sized firms. This is the second reduction following a cut in April aimed at rural banks.
More targeted policy steps are expected as the government tries to cope with a cooling property sector, even as exports get some relief from the global economic recovery.
Top leaders have ruled out any large-scale stimulus as China remains burdened with piles of local government debt, the hangover from a 4 trillion yuan ($652 billion) spending package implemented in 2008-2009.
China's banking regulator said last week that supervision of the shadow banking sector will be tightened further as part of a campaign to control off-balance sheet lending by financial institutions that could pose large hidden risks.
Data released earlier in the week showed central and local governments responding to the economy's slow start to the year by spending more. Their total fiscal spending surged nearly 25 percent in May from a year earlier, quickening sharply from a 9.6 percent rise in the first four months of the year.
On Thursday, Standard & Poor's affirmed its AA- rating on China's long-term sovereign debt with a stable outlook, citing the country's solid growth prospects, strong external and fiscal positions. ($1 = 6.2165 yuan) (Reporting by China Economics Team; Editing by Kim Coghill and Simon Cameron-Moore)