BEIJING - The Chinese government is highly concerned by fast-rising property prices in some cities and will work to combat speculation, Premier Wen Jiabao said in an interview broadcast on Sunday.

Premier Wen said that differentiated interest rates would be one tool to fight speculation, apparently referring to the policy proposal that China could keep preferential mortgage rates in place for people buying their first homes but eliminate them for home purchases beyond that.

He warned that although there is no sign of inflation at present, this year's exceptional money supply growth could stoke inflationary expectations and that inflation could appear.

He was speaking in an interview carried on the central government's website ( ($1=6.826 Yuan) (Reporting by Zhou Xin and Simon Rabinovitch; Editing by Lucy Hornby)