* Loans, money supply stronger than expected
* June new loans 1.08 trln yuan, vs f'cast 915 bln yuan
* June M2 up 14.7 pct yr/yr, vs f'cast 13.5 pct
* TSF at 1.97 trln yuan in June, vs 1.4 trln yuan in May
* C.bank seen loosening monetary conditions to support
(Adds details, analyst quotes)
BEIJING, July 15 Chinese banks lent a much
stronger-than expected 1.08 trillion yuan ($173.9 billion) worth
of new yuan loans in June as Beijing steps up efforts to
stimulate the world's second-largest economy.
Markets had expected banks to write 915 billion yuan in new
loans for the month, up modestly from May.
Broad M2 money supply jumped 14.7 percent last month from a
year earlier, the People's Bank of China said in a statement on
its website on Tuesday, also higher than a forecast of 13.5
percent in a Reuters poll of economists.
"While a fall in short-term lending rates hinted at a higher
supply of funds during the month, the money swirling in the
market reflects the urgency of the authorities to ramp up
economic activity," said Chester Liaw, an economist at Forecast
Pte in Singapore.
Outstanding yuan loans grew 14 percent from a year ago,
better than a predicted 13.8 percent rise.
The central bank also said China's total social financing
aggregate, a broad measure of liquidity in the economy, was 1.97
trillion yuan in June versus 1.4 trillion yuan the month before.
"We had previous expected aggregate financing to come in
much higher, but still the 1.97 trillion yuan printed is a major
upside surprise," Liaw said.
The People's Bank of China 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
The strong growth in money supply in June "is an explicit
loosening of (monetary) conditions. Some of this is seasonal. At
the end of the quarter there was demand for cash. And evidently,
the authorities supplied it," said Tim Condon, economist at ING
Bank in Singapore.
After a shaky start to the year, China's economy has
recently shown signs of steadying as a series of government
stimulus measures kick in.
However, many economists stress that the rebound looks
patchy and believe more policy support may still be needed to
ensure a sustained recovery.
The government is due to release second-quarter GDP growth
on Wednesday, along with data on fixed-asset investment for the
first half and factory output and retail sales for June.
China's foreign exchange reserves, the world's largest, rose
to $3.99 trillion at the end of June from $3.95 trillion at the
end of March, central bank data showed on Tuesday.
That showed foreign exchange reserves rose by about $40
billion in the second quarter, slowing from a $130 billion rise
in the first quarter and $157 billion in the fourth quarter of
Speculative "hot money" inflows may have eased after
suspected central bank intervention earlier this year to weaken
the yuan as a means of punishing speculators who were betting on
non-stop appreciation of the currency.
($1 = 6.2103 yuan)
(Reporting by China economics team; Editing by Kim Coghill)