It's-A Getting Worse: China Stops Lending to U.S. Banks (Just a Rumor, Says China)

Reuters says:

Chinese regulators have told domestic banks to stop interbank lending to U.S. financial institutions to prevent possible losses during the financial crisis, the South China Morning Post reported on Thursday.

The Hong Kong newspaper cited unidentified industry sources as saying the instruction from the China Banking Regulatory Commission (CBRC) applied to interbank lending of all currencies to U.S. banks but not to banks from other countries.

Via our pals at Unqualified Offerings.

And in a completely unrelated matter, just ask any respectable master of finance, how has gold been doing the past couple of weeks? Up $140! (About 19 percent.)

UPDATE: Reuters wrong, saith MarketWatch:

China's government moved to calm financial markets Thursday and denied a report that it had ordered mainland banks to curb lending to U.S. banks, a day after rumors of financial stability led to a run on a Hong Kong institution.

The China Banking Regulatory Commission moved to quash a South China Morning Post report Thursday that said Chinese regulators have told domestic banks to stop interbank lending to U.S. financial institutions.

"The CBRC has never, through any channel, released a statement or ordered domestic commercial banks not to lend to or borrow from U.S. financial institutions," the regulator said in a statement on its Web site.

Thanks for that update/correction link to commenter "Ombudsman."