BEIJING, Jan 10 (Reuters) - China's M2 measure of money supply grew 13.8 percent in December from a year earlier, broadly in line with market expectations for a 14 percent rise and matching the previous month's 13.9 percent gain, central bank data showed on Thursday.

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

KEY POINTS:

- Dec social financing aggregate at 1.63 trillion yuan vs Nov's 1.14 trillion yuan.

- Dec M2 money supply rose 13.8 percent (forecast 14.0 pct)

- Dec outstanding loan growth was 15 percent (forecast 15.2 pct)

- FX reserves rose to $3.31 trillion in the fourth quarter from $3.29 trillion in the previous three months.

COMMENTARY:

TIM CONDON, ECONOMIST, ING (SINGAPORE)

'I think the trend loan growth has reverted to 14 percent, which is the average in the decade before the huge stimulus of 2008/09 and is sufficient to support authorities' projected economic growth.

'I think monetary conditions will be neutral this year and will remain neutral. My forecast for China's inflation is that it will remain very low this year and average 3 percent.'

ZHANG ZHIWEI, ECONOMIST, NOMURA (HONG KONG)

'Total social financing remains very strong. Trust loans were very strong and bond issuances were very strong too. This should make regulators worry more about shadow banking. When the government came out to ban some local governments from some fund-raising activities, it was probably a reaction to the boom in shadow banking.

'So overall monetary conditions will probably be tighter this year than last year.'

LINKS:

For details, see the People's Bank of China website at http://www.pbc.gov.cn

BACKGROUND:

-- China's central bank has said it would use various tools to ensure steady credit growth to support the economy while pursuing financial reform in the face of weakness and uncertainty in the global economic outlook.

-- China's annual policy-setting conference said in mid-December that Beijing would ensure appropriate growth in bank loans and social financing in 2013 to cushion the economy against global headwinds.

-- The central bank last cut interest rates in July and has lowered RRR three times since late 2011 to free an estimated 1.2 trillion yuan ($190 billion) for lending.

-- But the PBOC has refrained from cutting interest rates or reserve requirement ratio further since July and opted to open market operations to inject short-term cash into the money market, as it is wary of reigniting inflation and fanning up property prices.

(Reporting By Beijing Economics Team) Keywords: CHINA ECONOMY/MONEY

(xiaoyi.shao@thomsonreuters.com +8610-66271221)(Reuters Messaging: xiaoyi.shao.reuters.com@reuters.net)

COPYRIGHT

Copyright Thomson Reuters 2013. All rights reserved.

The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.