BEIJING - China's credit data came in stronger than expected in June, with new yuan-denominated loans jumping to 1.08 trillion yuan ($175.61 billion), up from 870.8 billion yuan in May.

In the first six months, new yuan-denominated lending hit 5.74 trillion yuan, up 659 billion yuan on a year-on-year basis, according to figures released by the People's Bank of China on Tuesday.

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Faster growth in loans is expected to channel more liquidity away from the interbank market, and into the real economy, according to a HSBC research note written by economists Qu Hongbin and Julia Wang.

But they warned that another few months of data will be needed to see if banks will continue to expand their lending to borrowers.

More loans contributed to growth in aggregate financing. China's total social financing aggregate, a broad measure of liquidity in the economy, came in at 10.57 trillion yuan in the first half, up 414.6 billion yuan from a year ago.

The robust growth in both standard credit and non-standard financing was also partly due to the government's recent targeted cuts in reserve requirement ratio at some banks, injecting more liquidity into the market, according to a report from BofA Merrill Lynch Global.

M2, a broad measure of money supply that covers cash in circulation and all deposits, increased by 14.7 percent year on year to 120.96 trillion yuan at the end of June.

The growth pace was up 1.3 percentage points from the previous month and 1.1 percentage points higher than the end of last year.

The pickup in M2 growth was partly due to the base effect created by the so-called money squeeze in the interbank market last June.

China's economic growth slowed to 7.4 percent year on year in the first quarter. Figures on economic performance for the second quarter are due out on Wednesday.