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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.

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NANNING, China (Reuters) - China's banking regulator sought to reassure jittery financial markets on Thursday, denying a report it had told local banks to stop lending to U.S. banks and stressing that foreign bank operations in China were healthy.

"The CBRC has never, through any channel, issued a statement or told domestic commercial banks not to lend to or borrow from U.S. financial institutions," the China Banking Regulatory Commission said in a statement on its website.

CBRC Vice Chairman Wang Zhaoxing told Reuters that a report in the South China Morning Post, which said the agency had told Chinese banks to stop lending to U.S. banks in the interbank market, was not correct.

"If they are not willing to lend, this is the normal practice of risk control," said Wang, speaking on the sidelines of a major banking conference.

The CBRC later said the SCMP report was irresponsible.

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