The unexpected action is intended to tamp down a potential bubble in the bond market fueled by investors shunning riskier assets like stocks and real estate.

The bank halted its government bond purchases Friday in an attempt to slow a one-way bonds trade that's put unwanted downward pressure on the yuan, analysts say.

China's central bank said on Friday it has suspended treasury bond purchases, triggering a jump in yields and spurring speculation that the move was aimed at defending a falling currency. The People's Bank of China (PBOC) cited a shortage of bonds in the market as the reason it was halting the purchases,