The mainland's weaker than expected economic data for last month is likely to convince Beijing to continue its expansionary policies for the rest of the year and could help mollify recent fears in what had been red-hot property and stock markets, analysts said. The data released on Tuesday showed the beginnings of a moderation in government-driven investment and lending. Consumer and producer prices continued to drop while exports extended their decline. 'The overall policy stance will follow the proactive fiscal policy and relatively loose monetary policy in the rest of the year and perhaps the first few months of 2010,' wrote Ting Lu and TJ Bond, economists with Bank of America-Merrill Lynch. Ha Jiming, the chief economist with China International Capital Corp, agreed with other economists, saying Beijing will 'maintain its expansionary policy stance in the third quarter and material adjustments may not be seen until fourth quarter of 2009'. The data came just days after the government reaffirmed its decision to maintain its 'appropriately loose' monetary policy stance and expansionary fiscal policy bias. Prompted by better than expected first-half data released in the middle of last month, some raised their forecasts comfortably above the government's 8 per cent target. Capital spending and fixed-asset investment in urban areas slowed to a 30 per cent increase last month from 35 per cent in June, which was lower than market consensus. Bank lending also slowed, with new loans totalling 355.9 billion yuan down from 1.53 trillion yuan in June. Exports dropped 23 per cent following a 21.4 per cent slump in June. Meanwhile, industrial output expanded 10.8 per cent, slightly higher than June's 10.7 per cent, and retail sales rose 15.2 per cent, up from 15 per cent. Ben Simpfendorfer, an economist with Royal Bank of Scotland, said the July data argued against a further tightening in policy. 'Fewer positive surprises from the data, a slowing in new credit growth and persistent deflation make it unlikely for the State Council to shift its policy stance before early 2010,' he said. The markets have worried about tightening policies following recent warnings by some officials and regulators about possible asset bubbles. The mainland's stock markets have almost doubled this year and property prices have bounced back to the level before the global financial crisis. Qian Wang, the chief China economist with JP Morgan Chase Bank, said the latest data showed that the strong growth momentum in the mainland economy in the second quarter this year would likely moderate 'as previous lifts from the fiscal cycle and inventory cycle fade'. Mr Wang said he believed policymakers would only shift direction at the economic summit at the end of the year and alter policies only when an export recovery was confirmed and inflation pressure started to emerge.