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ECB sees tentative signs of recovery for euro banks

Europe's battered financial sector is showing tentative signs of healing, even if it is still too early to sound the all-clear, a key ECB survey showed on Thursday

FRANKFURT: Europe's battered financial sector is showing tentative signs of healing, even if it is still too early to sound the all-clear, a key ECB survey showed on Thursday.

Banks are about to ease up on credit conditions and increase the availability of loans for businesses, the survey suggested pointing to an important factor in the dynamics of the still sluggish eurozone economy.

But demand for business loans remains weak.

Credit conditions in the euro area are still being tightened but could start to ease again in coming months, the European Central Bank found in its quarterly bank lending survey.

The net percentage of banks expecting to tighten their loan criteria for businesses and households eased to 2.0 per cent in the fourth quarter from 5.0 per cent in the third quarter, the ECB said.

For the first quarter of 2014, "euro area banks expect a further reduction in the net tightening on loans to non-financial corporations -- to reach nil -- and a more intense net easing for loans to households," the survey found.

"The January 2014 Bank Lending Survey provides further indications of stabilisation in credit conditions for firms and households, in the context of persistently weak loan demand," the ECB wrote.

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