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on U.S. trade threat@
* April new loans at 1.02 trln yuan vs forecast 1.2 trln yuan
* April M2 money supply up 8.5 pct y/y, in line with forecast
* April TSF at 1.36 trln yuan vs forecast 1.7 trln yuan (Adds analyst quote)
BEIJING, May 9 (Reuters) - Chinese banks throttled back new lending in April after a record first quarter that sparked fears of more bad loans, but analysts say the central bank will have to keep up policy support for the economy due to escalating trade tensions with the United States.
Global investors are closely watching to see how much more support Beijing injects into the economy to shore up growth. But expectations that it may be moving to a more cautious approach shifted wildly this week after a sudden blowup in U.S.-China ties.
Chinese banks extended 1.02 trillion yuan ($150.16 billion) in net new yuan loans in April, the central bank said on Thursday, well below analysts' expectations of 1.2 trillion yuan in a Reuters poll and March's surprisingly strong 1.69 trillion yuan.
The credit data was released unexpectedly early, hours ahead of the resumption of last-ditch U.S.-China trade talks and a day ahead of a threatened U.S. tariff increase on Chinese goods. The numbers are usually released between the 10th and 15th of every month.
U.S. President Donald Trump stunned global financial markets on Sunday by announcing the tariff measures, which Beijing later said it will retaliate against. Investors had been betting on news of a trade agreement soon that would relieve pressure on both economies.
While China's April lending levels have tended to moderate from March in past years, investors had been looking to details of the data for clues on how much more policy easing to expect.
Policy insiders told Reuters late last month that China's central bank is likely to pause to assess economic conditions before making any further moves to ease banks' reserve requirements, after better-than-expected March growth data reduced the urgency for action.
While the central bank's easing bias remained unchanged, the sources said it was concerned that pumping too much cash into the economy could reignite bubbles over time, and it wanted to save some of its policy ammunition in case activity deteriorated again.
April's more modest lending levels suggested Beijing was fine-tuning its policy stance last month, economists at Nomura said in a note.
But they added: "We expect a rebound of money and credit in May.
"The sudden escalation of U.S.-China trade tensions and the recent sharp drop of stock prices could convince Beijing to take further easing measures to bolster confidence and stabilize growth."
CREDIT GROWTH KEY TO RECOVERY
Thursday's data also showed that broad M2 money supply in April grew 8.5 percent from a year earlier, in line with market estimates but dipping slightly from March.
Outstanding yuan loans grew 13.5 percent from a year earlier, slightly lower than expectations and March's 13.7 percent.
Growth of outstanding total social financing (TSF), a broad measure of credit and liquidity in the economy, slowed to 10.4 percent from a year earlier from 10.7 percent in March. TSF growth is a rough gauge of credit conditions.
Total TSF in April fell much more than expected, to 1.36 trillion yuan from 2.86 trillion yuan in March.
Optimism over the outlook for the world's second-largest economy has improved recently, although preliminary economic data for April showed growth had become more subdued.
But analysts say the Chinese economy is not out of the woods yet, and the chance of reaching a trade deal during Vice Premier Liu He's visit has declined, adding more uncertainties which might prompt policymakers to take swifter and stronger action.
Top officials have repeatedly vowed not to open the credit floodgates in an economy already saddled with piles of debt - a legacy of massive stimulus during the global financial crisis in 2008-09 and subsequent downturns.
The central bank has cut banks' reserve requirements five times over the past year, and on Monday announced a smaller targeted cut to help cash-strapped smaller firms.
It has also guided money market interest rates lower in various ways, but has not cut benchmark policy rates as it did in the past.
(Reporting by Yawen Chen and Kevin Yao; Editing by Kim Coghill)