FRANKFURT, March 5 Differences in corporate loan
costs across the euro zone inched up in January but remained
smaller than last year, adding to signs the bloc's economy is
mending and European Central Bank policies are gaining traction.
Data released by the ECB on Wednesday, a day ahead of its
monthly policy meeting, showed the central bank's measure of
country-by-country variation in large corporate loan interest
rates rose slightly in January from the December reading.
The cost differential was smaller than it had been for most
of 2013, however.
A narrowing of the differences in funding costs across the
euro zone is an indication for the ECB that the interest rates
it sets are beginning to filter through more evenly, making its
main tool to steer price stability more effective.
The ECB is expected to keep its main refinancing rate at a
record low of 0.25 percent when it meets on Thursday, but the
Governing Council could take action to loosen lending conditions
as inflation remains stuck below the ECB's target.
Funding costs for euro zone companies began to diverge as
the financial crisis laid bare country-specific risks, prompting
investors to demand premiums in some member states. Despite the
recent improvement, the differences remain stark.
The data showed that companies in Portugal had to pay 5.45
percent interest on new loans on average in January compared
with 5.24 percent in December. In Finland, companies paid just
(Reporting by Eva Taylor; Editing by Catherine Evans)