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Eurozone M3 Growth Slows In January; Lending To Businesses Eases

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Eurozone M3 money supply annual growth slowed at the start of the year after accelerating in the previous month, suggesting sluggish investment environment as businesses face risks from trade tensions and a weakening global economy.

M3, a measure of broad money supply, grew 3.8 percent year-on-year in January after a 4.1 percent increase in December, data from the European Central Bank showed on Wednesday. Economists had expected the pace of growth to slow to 4 percent.

Annual growth rate of narrower monetary aggregate M1, which comprises of currency in circulation and overnight deposits, fell to 6.2 percent from 6.6 percent.

Growth in lending to households was steady at 3.2 percent in January.

The increase in loans to businesses slowed to 3.3 percent from 3.9 percent. The growth was the slowest since April last year, when lending rose at the same pace.

"Weaker lending reflects a more subdued investment environment as businesses are affected by downside risks and slow new orders," ING economist Bert Colijn said.

"With demand growth for loans weakening at the moment, the ECB will remain concerned about the state of the eurozone economy ahead of the March meeting," the economist said.

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