UPDATE 2-Kazakh leader urges less spending, more exploration

(Adds quotes, details)

By Raushan Nurshayeva

ASTANA, Feb 6 (Reuters) - Kazakh leader Nursultan Nazarbayev ordered his government on Wednesday to cut spending to tame inflation, urging Central Asia's biggest economy to learn its lesson from global financial instability.

Separately, the veteran leader urged the energy sector to intensify exploration for new natural resource deposits in a country lying on vast oil, gas and uranium reserves.

A credit crunch caused by the U.S. subprime mortgage crisis has hit Kazakhstan's banking sector hard, snapping its double-digit economic growth and sparking concerns about banks' ability to repay or refinance their existing debt.

In his annual state of the nation address, Nazarbayev urged the government and the central bank to do more to prevent volatility in the domestic financial sector.

"We must learn lessons stemming from the U.S. mortgage crisis which has had a serious impact on the global financial system as well as our banks," he said.

"We have to intensify work to fight inflation. The government must temporarily ... cut state spending across the board apart from social spending," he said. "This will help ease inflationary pressure."

Kazakh banks have borrowed abroad heavily to fund their lending growth. Analysts say they must tighten up their lending and borrowing, and cut their foreign exposure although borrowing abroad is expected to pick up in the second half of this year.