Euro zone M3 growth slows sharply, private loans contract

FRANKFURT Wed Jan 29, 2014 4:19am EST

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FRANKFURT Jan 29 (Reuters) - Lending to households and companies in the euro zone contracted in December and money supply growth slowed sharply, adding to pressure on the European Central Bank to do more to support the euro zone's weak economy.

The ECB has cut interest rates to a record low, pumped extra liquidity into the banking system and announced a fresh government bond purchase programme, but the measures have so far not managed to unclog lending to the real economy.

Loans to the private sector shrank by 2.3 percent in December from the same month a year earlier, ECB data released on Wednesday showed. That compared to a contraction of the same amount in November.

Euro zone M3 money supply - a more general measure of cash in the economy - grew at an annual pace of 1.0 percent, slowing from 1.5 percent in November.

(Writing by Paul Carrel)

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