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Euro lending up, but only slightly

ECB figures - Lending to businesses disappoints
ECB figures - Lending to businesses disappoints

The European Central Bank says bank lending to the euro zone's private sector picked up slightly in June.

A bank spokesman said lending increased by 0.3% from the level in June 2009, following a modest rise of 0.2% in May.

Growth of the ECB's M3 money supply indicator, which measures cash, deposits and other financial benchmarks, rose by 0.2% in June. This was the first increase since October 2009, after a slight rise initially reported for January was revised lower.

Lending and money supply data are indicators of consumer demand and overall economic activity.

Rising figures point to stronger demand, which usually means inflation could strengthen and prompt the ECB to raise interest rates. They are now at a record low of 1%, but are not expected to be raised in the near future.

The euro zone emerged from recession last year and is now trying to nurture its recovery as leaders tackle excessive deficits and debt in many member countries.

But a breakdown of the data showed that loans to non-financial companies fell by 0.4% in June from the previous month. Analysts said this was disappointing, as it showed no sign that banks were becoming more willing to lend to businesses.