INSTANT VIEW 1-China forex reserves hit $2.4 trln

BEIJING, Jan 15 (Reuters) - China's foreign exchange reserves, the world's largest, rose by $126.5 billion in the fourth quarter to $2.4 trillion, the People's Bank of China said on Friday.

Chinese banks extended 379.8 billion yuan ($55.6 billion) in new local-currency loans in December, up from 294.8 billion yuan in November.

Annual growth in China's broad M2 measure of money supply slowed to 27.7 percent in December from 29.7 percent in November.

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KEY POINTS:

-- Median forecast for foreign exchange reserves at the end of December was $2.4 trillion.



COMMENTARY:

XU JIAN, ANALYST AT CHINA INTERNATIONAL CAPITAL CORP IN BEIJING:

'December M2 was slightly below our forecast but that was due to a base effect and doesn't change our estimate of loose liquidity in 2010.'



WANG HU, ANALYST WITH GUOTAI JUNAN SECURITIES IN SHANGHAI:

'The numbers are largely in line with our expectations.

'We expect to see a total of three to four RRR hikes this year, depending on changes in the export situations.

'The possibility of an interest rate increase in the first half is small.

'Growth of M2 has reached the peak and is expected to slow this year.'



LINKS:

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



BACKGROUND:

-- The People's Bank of China said on Tuesday it would raise banks' reserve requirement ratio by half a percentage point, after pushing up bill yields over the past week.

-- The move comes after reports that bank lending soared in the first week of the year and was seen as sending a signal to banks not to extend credit excessively.

(Reporting by Karen Yeung in Shanghai and Michael Wei in Beijing; Editing by Jason Subler)

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