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UPDATE 1-China will make monetary policy more flexible, targeted - c.bank

(Adds background, details)

BEIJING, Nov 26 (Reuters) - China’s central bank said on Thursday it will make prudent monetary policy more flexible and targeted, and reiterated it will not resort to flood-like stimulus.

China will keep the macro-leverage ratio basically stable, and improve the bond default risk prevention and disposal mechanism, the People’s Bank of China (PBOC) said in its third-quarter monetary policy implementation report.

Several high-profile defaults recently by Chinese state firms, including Yongcheng Coal & Electricity Holding Group and Huachen Auto Group Holdings Co sent shockwaves across China’s corporate bond market.

The bond defaults dented investor confidence and pushed up funding costs for many corporate borrowers, adding to pressures on China’s nascent economic recovery.

China will maintain “normal” monetary policy as long as possible, said the PBOC report, reiterating previous comments by its governor Yi Gang. (Reporting by Lusha Zhang, Judy Hua and Gabriel Crossley; Editing by Toby Chopra)

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