China's new yuan loans contracted by 340 billion yuan in July, the second monthly decline this year, missing Reuters-polled forecasts for a 45 billion yuan increase and highlighting weak credit demand in the world's second-largest economy. Reuters calculations based on People's Bank of China data showed lending fell after a 1.61 trillion yuan increase in June and a 50 billion yuan decline a year earlier. Household loans, including mortgages, shrank sharply and corporate lending also turned negative, while outstanding yuan loan growth eased to a record-low 5.1% from 5.2% in June. Broad M2 money supply rose 7.7%, below forecasts, and outstanding total social financing (a broad measure of credit and liquidity) increased 7.4%, unchanged from June. The figures add to signs that China's recovery in credit growth remains weak as households deleverage and private-sector borrowing demand stays subdued, even after top leaders pledged to support growth mainly through faster fiscal spending on already approved infrastructure projects rather than major new stimulus.