Lending conditions in the euro zone deteriorated in March and the economic gap separating Germany from the bloc's problem debtors widened, data released by the European Central Bank showed on Friday.
Lending to euro zone companies levelled off month-on-month in March after rising 4 billion euros ($5.2 billion) in February, data showed, while companies borrowed 1.3 percent less than a year ago, the ECB said.
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Speculation is rising that the ECB will cut interest rates next week on evidence that an economic recovery is faltering and as government austerity efforts meet mounting opposition.
"The continuing contraction in euro zone credit is now a major headache for euro zone policymakers," said David Brown at New View Economics in a note. "Without access to easier credit, the euro zone recovery will wither on the vine."
Separately on Friday, the ECB said small businesses in Greece faced widespread rejection when applying for loans while applications in Germany were largely accepted in the six-month period to March.
The ECB has repeatedly expressed concern about weak lending and is studying ways to alleviate the funding strain for small companies, the backbone of the European economy.
The study showed only a quarter of Greek small- and medium-sized businesses that applied for a loan received full approval, while more than four-fifths of German ones were agreed.
On Thursday German Chancellor Angela Merkel took the rare step of commenting on monetary policy, saying the ECB would have to raise rates if it were looking at Germany alone.
Comments by ECB policymakers earlier this week suggest that falling inflation and poor growth prospects in the euro zone tilt the ECB towards a further cut in its main refinancing rate.
The lending survey of 7,510 euro zone firms was conducted between February 18 and March 21.
(Reporting by Thomas Atkins and Sakari Suoninen; Editing by Ruth Pitchford)