UPDATE 1-China forex data implies capital inflows in Dec

* Dec net purchases at 134.6 bln yuan-c.bank data

* Dec data reverses from Nov sale of 73.6 bln yuan

* Foreign capital inflows rise as economy recovers

(Adds details)

BEIJING, Jan 15 (Reuters) - China became a net buyer of foreign exchange in December, reversing November's position and indicating more capital inflows as the world's second-largest economy recovers.

China's central bank and commercial banks bought 134.6 billion yuan ($21.64 billion) worth of foreign exchange on a net basis last month, central bank data showed on Tuesday.

That compared with net selling of 73.6 billion yuan in November. China had net foreign currency purchases in October.

The net purchases in December may have also reflected a jump in the month's trade surplus to $31.6 billion from November's $19.6 billion.

Chinese banks have alternated between net buying and selling of foreign currencies in recent months in a trend that reflects bigger gyrations in the yuan as it approaches a level many analysts believe is close to equilibrium.

Analysts say larger foreign currency purchases, which point to base money creation, tend to relieve pressures on the central bank to inject fresh liquidity into the banking system.

The central bank has been relying on its open market operations to inject short-term cash in recent months, rather than by cutting interest rates or banks' reserve requirement ratios (RRR).

It cut RRR three times between late 2011 and May 2012 as part of steps to bolster the economy.

China's top foreign exchange regulator has downplayed risks of increasingly volatile capital flows, citing large foreign exchange reserves, a steady trade surplus and firm economic growth as a backdrop for stability.

China's annual economic growth may have quickened to 7.8 percent in the fourth quarter, snapping seven straight quarters of weaker expansion, but the recovery is likely to be tepid and the economy may need continued policy support.

GDP data is due on Friday.

The renewed appreciation of the Chinese yuan since mid-2012 may also be helping to lure in more foreign capital, analysts say. The yuan hit a fresh record high on Monday.

($1 = 6.2192 Chinese yuan)

(Reporting by Aileen Wang, Xiaoyi Shao and Kevin Yao; Editing by Jonathan Standing & Kim Coghill)