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Falling credit raises speculation ECB may act

September 26. 2013 6:40AM
Associated Press

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(AP) Bank loans to eurozone businesses fell again in August, increasing speculation the European Central Bank may act to make more cheap credit available.

Figures released Thursday by the ECB show loans to non-financial businesses fell 3.8 percent after a 3.7 percent drop in July.

The ECB has warned that lack of affordable credit for small and medium-sized companies is holding back growth. The 17-country euro currency union emerged from recession in the second quarter with growth of 0.3 percent from the quarter before but recovery remains fragile.

Credit is tight because banks are still cautious about lending and companies about borrowing in an unsteady economy. Some banks have strained finances.

Analysts say the ECB could respond by making a third round of cheap, long-term loans to banks.

Associated Press

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