BEIJING, Nov 3 (Reuters) - China's central bank said on Friday that the country's interbank market operator was probing "abnormal" trades on Oct. 31, when overnight borrowing costs surged to as high as 50%.

Chinese regulators were investigating a month-end liquidity crunch that boosted short-term money rates to a record high, asking some institutions to explain why they borrowed at extremely high rates, Reuters reported on Thursday.

In response to the report, the People's Bank of China (PBOC) said that its affiliate, the China Foreign Exchange Trade System (CFETS), was gathering information about abnormal trades on Tuesday involving repo - a short-term financing business.

"In the backdrop of overall stable operation of the interbank repo market, CFETS on Oct. 31 found that individual special accounts repeatedly borrowed and lent money at extremely high interest rates toward market close," the PBOC said in a statement to Reuters.

CFETS is responsible for monitoring and supervising interbank market operations on a daily basis, and so has a duty to understand such "abnormal" trades, the PBOC said.

Traders and analysts said a flood of government bond issuance created unusual liquidity stress at a time when banks needed to square their books to meet month-end regulatory requirements.

The PBOC is walking a tightrope between keeping liquidity ample in a struggling economy and stabilising the yuan currency, analysts say. (Reporting by Beijing Newsroom; Editing by Christina Fincher and Alison Williams)