China cenbank: will provide cash for any banks with shortages

BEIJING (Reuters) - China's central bank will help out with cash any banks facing a temporary shortage, and has already provided money to some institutions, it said on Tuesday, in further comments aimed at soothing battered money markets.

In a statement broadly echoing comments earlier in the day, it added that there is no shortage of overall liquidity, and the current crunch will gradually fade.

The People's Bank of China (PBOC) wants to curtail the diversion of funds to a vast informal loan market as it seeks to shore up growth in the world's second-largest economy, but its tough stance has raised fears of a lasting credit crunch.

Money market rates soared last week after authorities allowed cash market conditions to tighten, and even though short-term rates have come down this week, bank stocks have tumbled on concerns tight funding would hurt earnings and the economy.

(Reporting by Aileen Wang and Jonathan Standing; Editing by Richard Borsuk)