* China to hew "unswervingly" to accommodative money policy
* Fast loan growth has helped economy, but recovery not solid
* Central bank to keep an eye out on banks' property lending
By Zhou Xin and Simon Rabinovitch
BEIJING, July 24 (Reuters) - China's central bank on Friday stamped on speculation that it might tighten monetary policy but said it would do more to ensure loans are used for productive purposes and not for speculation.
In a statement issued after a meeting of its senior officials to chart policy for the rest of 2009, the People's Bank of China said it would stick to an appropriately accommodative monetary stance because economic recovery was not yet on a solid footing.
Financial markets have begun to speculate that the PBOC might put its foot on the brakes, perhaps by raising required reserves, in response to record loan growth in the first six months and growing strength in the local equity and property markets.
But the PBOC echoed the conclusions of a meeting on Thursday of the ruling Communist Party's decision-making Politburo, which said there were no grounds to abandon stimulative policies as the world's third-largest economy still faced a lot of challenges.
"We will unswervingly continue to implement an appropriately relaxed monetary policy," the central bank said.
The PBOC, which has resumed the sale of one-year bills and nudged up money market rates, said it would use various monetary policy tools "flexibly" to make money and credit growth more sustainable.
REAL ESTATE
Banks lent a record 7.37 trillion yuan ($1.08 trillion) in the first half, almost 25 percent of GDP, and Wu Xiaoling, a former PBOC vice governor, warned this week that excessive bank lending was flowing into the property market and could inflate asset bubbles. [ID:nPEK185182]
In an apparent acknowledgment of that concern, the PBOC said: "We will focus money and credit growth on supporting sectors of the real economy."
It singled out real estate, pledging to step up monitoring of the sector and ensure that relevant credit policies were implemented.
In the same vein, the China Banking Regulatory Commission has reminded banks twice this week of the mortgage rates and down payment requirements that apply for non-owner-occupied homes. [ID:nPEK366999]
The PBOC said it would continue to focus on raising the quality of bank loans and controlling the risks lenders run.
But, significantly, the statement expressed satisfaction with the breakneck rate of loan growth so far this year.
"In the first half, aggregate money and credit grew fast and the loan structure continued to improve, which played an important role in reversing the downturn in economic growth and boosting market confidence," the PBOC said.
Nor did the central bank statement make any mention of inflation. Prices in China have been falling at the consumer and producer level for several months.
The PBOC said it would encourage banks to lend to certain sectors and not to others.
Among those in favour, it listed key infrastructure projects, technical upgrading, innovation, energy saving, pollution reduction and small- and medium-sized enterprises. ($1=6.830 Yuan) (Reporting by Zhou Xin, Simon Rabinovitch and Langi Chiang; Writing by Alan Wheatley; Editing by Jacqueline Wong)