Gov't curb brings down China loans in February

The figure was only around half the January amount as China last month marked the annual Lunar New Year, the nation's most important holiday and a time when much business activity shuts down.

However, it was also 371.4 billion yuan less than total loans extended in the same month in 2009, the People's Bank of China said in a statement on its website.

Massive lending in China has triggered fears that excess liquidity is fuelling inflation and a spending spree by speculators that is contributing to property and stock market bubbles.

The broadest measure of money supply, what economists call M2, which includes cash and money in savings accounts, rose 25.52 percent at the end of February from a year earlier, slightly below the 25.98 percent rise at the end of January.

Chinese regulators have repeatedly told banks to rein in new lending.

On Friday, Premier Wen Jiabao said China will slash its bank lending target in 2010 to 7.5 trillion yuan, after new loans extended by China's banks nearly doubled in 2009 from the previous year to 9.6 trillion yuan.

Regulators have increased the amount of funds that banks are required to hold in reserve twice this year, effectively limiting the amount of money available for lending.

Banks, which tend to front-load their new lending in the early part of the year, were also told to spread lending out more evenly throughout the year.

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