FRANKFURT (Reuters) - Lending to euro zone businesses rose on the month in February for the first time since July, showing patchy and fragile gains that offer a glimmer of hope for the euro zone's crisis-hit economy.
Banks granted non-financial firms 2 billion euros (1.69 billion pounds) more of loans in February than in the previous month, European Central Bank data adjusted for sales and securitisations showed on Thursday.
February's increase in the flow of loans, which came after an 8 billion euro fall in January, was however far smaller than any of the falls in the prior six months.
"A positive spin would be that the marginal increase in lending in February could be a sign that matters may be starting to improve ... but it is still a very weak underlying lending picture," IHS Global Insight economist Howard Archer said.
A breakdown of the ECB data showed lending to households and companies continued to weaken in the euro zone periphery, where banks demand higher interest rates for loans than in the euro zone core countries.
Private sector lending was down in Spain for the fifth straight month, while Portugal, Greece and Slovenia have recorded falling loan data for over a year now.
In a sign of the euro zone's woes, confidence in the bloc's economy worsened in March, falling after four straight months of gains and suggesting a hard route out of recession, European Commission data showed on Wednesday.
Euro zone M3 money supply - a more general measure of cash in the economy - grew at an annual pace of 3.1 percent in February, slowing from 3.5 percent in January and below the consensus of 3.3 percent from analysts polled by Reuters.
"We expect a delayed recovery, with the euro zone returning to growth in mid-2013," Berenberg Bank economist Christian Schulz wrote in a research note.
The ECB holds its April policy meeting next week. A Reuters poll of economists published on Wednesday showed they expected interest rates to remain on hold deep into next year.
ECB President Mario Draghi said last month the central bank's top priority was to enhance the transmission of its monetary policy across the euro zone.
At present, households and businesses in countries on the periphery of the euro zone face higher borrowing costs than those in the core of the bloc despite a single official interest rate for the 17-member currency area.
Draghi said last week euro zone central banks were working to improve the possibilities for banks' access to collateral for use in the ECB's lending operations, which provide banks with liquidity - a key factor in their ability to lend.
Archer at IHS Global Insight said there was a risk that the banking crisis in Cyprus could magnify the fragmentation of credit markets, but he expected the ECB to hold rates next Thursday.
"However, some governing council members did favour an interest rate cut in March, and we suspect that likely ongoing disappointing euro zone economic news will increasingly prod the ECB towards acting within the next few months," he added.
yahoo.com
Banks granted non-financial firms 2 billion euros (1.69 billion pounds) more of loans in February than in the previous month, European Central Bank data adjusted for sales and securitisations showed on Thursday.
February's increase in the flow of loans, which came after an 8 billion euro fall in January, was however far smaller than any of the falls in the prior six months.
"A positive spin would be that the marginal increase in lending in February could be a sign that matters may be starting to improve ... but it is still a very weak underlying lending picture," IHS Global Insight economist Howard Archer said.
A breakdown of the ECB data showed lending to households and companies continued to weaken in the euro zone periphery, where banks demand higher interest rates for loans than in the euro zone core countries.
Private sector lending was down in Spain for the fifth straight month, while Portugal, Greece and Slovenia have recorded falling loan data for over a year now.
In a sign of the euro zone's woes, confidence in the bloc's economy worsened in March, falling after four straight months of gains and suggesting a hard route out of recession, European Commission data showed on Wednesday.
Euro zone M3 money supply - a more general measure of cash in the economy - grew at an annual pace of 3.1 percent in February, slowing from 3.5 percent in January and below the consensus of 3.3 percent from analysts polled by Reuters.
"We expect a delayed recovery, with the euro zone returning to growth in mid-2013," Berenberg Bank economist Christian Schulz wrote in a research note.
The ECB holds its April policy meeting next week. A Reuters poll of economists published on Wednesday showed they expected interest rates to remain on hold deep into next year.
ECB President Mario Draghi said last month the central bank's top priority was to enhance the transmission of its monetary policy across the euro zone.
At present, households and businesses in countries on the periphery of the euro zone face higher borrowing costs than those in the core of the bloc despite a single official interest rate for the 17-member currency area.
Draghi said last week euro zone central banks were working to improve the possibilities for banks' access to collateral for use in the ECB's lending operations, which provide banks with liquidity - a key factor in their ability to lend.
Archer at IHS Global Insight said there was a risk that the banking crisis in Cyprus could magnify the fragmentation of credit markets, but he expected the ECB to hold rates next Thursday.
"However, some governing council members did favour an interest rate cut in March, and we suspect that likely ongoing disappointing euro zone economic news will increasingly prod the ECB towards acting within the next few months," he added.
yahoo.com
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