SHANGHAI (AFP) - China's central bank said on Friday it would "adjust" liquidity to ensure stability after a weeks-long squeeze that has rattled financial markets.

"The PBoC (People's Bank of China) will use all sorts of instruments and measures to adjust the overall liquidity level, so as to ensure the overall stability of the market," bank head Zhou Xiaochuan told a financial forum in the commercial hub of Shanghai.

For roughly three weeks, funds have been in short supply on China's interbank market, and the interest rates banks charge to lend to each other have surged to record highs.

China's central bank on Tuesday confirmed it had already offered liquidity "support" to banks and pledged to provide more if needed. That statement marked an apparent change of course after the central bank earlier ruled out providing fresh funds and ordered banks to put their financial houses in order.

Mr Zhou remained confident about China's growth, though he acknowledged the economy had slowed.

"The Chinese economy, basically speaking, has kept stable growth," he said.

"The growth rate has slowed down a little bit, but the growth rate is still in a reasonable range," he added, but gave no specific figure.

China has set its economic growth target at 7.5 per cent for all of this year. The country's economy, a crucial driver of global growth, expanded 7.8 per cent last year, its worst performance in 13 years.